Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

WELSH OFFICE PROVISIONAL ORDER (WESTERN VALLEYS (MONMOUTHSHIRE) SEWERAGE BOARD) BILL

Read the Third time and passed.

Oral Answers to Questions — EDUCATION AND SCIENCE

Voluntary-aided Grammar Schools

Mr. van Straubenzee: asked the Secretary of State for Education and Science when he will introduce legislation to vary the present legal status of the voluntary-aided grammar schools.

The Minister of State, Department of Education and Science (Mr. Edward Redhead): My right hon. Friend has no present intention of introducing such legislation.

Mr. van Straubenzee: Does the hon. Gentleman realise how glad many of those concerned with such schools will be, particularly in the Inner London Education Authority area, in view of the statement made by Mr. Young, Chairman of the Education Committee of that authority, that negotiations were in progress for the take-over of such schools?

Mr. Redhead: I note what the hon. Gentleman says. He will be glad to know that my right hon. Friend has asked authorities to consult governors of schools affected by their proposals for secondary reorganisation and the other voluntary interests concerned before submitting their plans to him.

Circular 10/66 (School Building)

Mr. Boyd-Carpenter: asked the Secretary of State for Education and Science whether he will now withdraw Circular 10/66 on school building programmes.

The Secretary of State for Education and Science (Mr. Anthony Crosland): No, Sir.

Mr. Boyd-Carpenter: Does the latter part of paragraph 5 of the circular mean that, where a local education authority's plans for secondary education do not coincide with the right hon. Gentleman's ideas on comprehensives, no building of secondary schools will be authorised however acute the overcrowding or the shortage?

Mr. Crosland: The Government's policy is perfectly clear. It is that the country should go comprehensive. It would be very foolish and uneconomical, that being so, not to make it plain to local authorities and to encourage them to build schools which were inconsistent with such a pattern.

Mr. Boyd-Carpenter: Does the right hon. Gentleman mean that he intends to use financial pressure to override the wishes of locally elected local education authorities?

Mr. Crosland: As for pressure on local authorities, the right hon. Gentleman might consult some of his ex-colleagues. Many Labour authorities have bitter memories of the treatment they suffered at the hands of Miss Horsbrugh and Sir David Eccles, as they then were. It is the Government's policy to go comprehensive. This being so, it seems logical and sensible that we should make clear that, when considering building plans, this is our policy.

Sir E. Boyle: Quite apart from the point made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), will the Minister bear in mind the very real anxiety among many local authorities that this circular will hold up school building and cause delay in very much needed school building plans?

Mr. Crosland: I do not believe that this anxiety is widespread. We have had no representations from any local authorities on this circular at all.

Mr. Freeson: Will my right hon. Friend accept that there are some local authorities, including my own, which are benefiting as a result of action taken under this circular in having their capital


works programmes increased so that existing out-of-date school buildings can be immensely improved?

Inner London Education Authority

Mr. Boyd-Carpenter: asked the Secretary of State for Education and Science if he will make a statement on the future of the Inner London Education Authority.

Mr. Crosland: I have nothing to acid to the statement I made on 18th November last.

Mr. Boyd-Carpenter: Does that mean that the right hon. Gentleman does not propose to introduce legislation to interfere with the review of the Inner London Education Authority provided for in the London Government Act?

Mr. Crosland: No, Sir; we propose to introduce legislation to repeal the so-called review clauses in that Act.

University Admissions

Mr. Edward M. Taylor: asked the Secretary of State for Education and Science what information he has regarding the number of students unable to obtain admission to university in October 1965; and how many of these were rejected by Scottish universities.

The Minister of State, Department of Education and Science (Mr. Goronwy Roberts): I can give figures only in respect of applications made through the Universities Central Council on Admissions, in which not all university institutions participated in 1965. In particular, certain Scottish universities continue to receive applications direct from Scottish students. There were 80,000 applicants for admission through U.C.C.A. in 1965, and there were 36,500 admissions through the scheme. Total admissions were, however, higher than this, being 49,500. For the reasons I have given, I cannot provide an answer to the second part of the Question.

Mr. Taylor: Are not those figures rather frightening, in view of the number of students with qualifications who are, apparently, rejected? Would it not be better for our balance of payments if we

restored the university building cuts instead of continuing them?

Mr. Roberts: It is important to realise that the difference between about 50,000 and 80,000 applicants does not necessarily reveal the number of intending students unable to obtain places. Many were able to go to university-type institutions, Many opted for a third sixth-form year, which in many cases is advisable. It is very likely that the number who failed to get into universities or university-type institutions was much smaller than the figures suggest.

Sir E. Boyle: But do not the figures which the Minister has quoted show clearly that the Robbins Committee, so far from over-rating, in fact under-rated the demand for full-time higher education? Will the hon. Gentleman take it that we intend at the earliest possible opportunity to have a debate on this matter to draw attention to what we regard as the inadequate provision which the Government are making?

Pinewood Hospital Buildings, Wokingham

Mr. van Straubenzee: asked the Secretary of State for Education and Science what proposals he has for using the Pinewood Hospital buildings near Wokingham for educational purposes.

Mr. Goronwy Roberts: The Berkshire County Council has submitted a proposal that, subject to its being able to acquire the Pinewood Hospital property, some of the buildings should be used as a residential unit for the Easthampstead Park College of Education.

Mr. van Straubenzee: Are not the buildings ideally suited for the purpose which the Minister has outlined, and will he give me his assurance that his Department is positively assisting the county council to lay its hands on these buildings, in view of the vigorous bid being made for them, for penal purposes I think, by the Home Office?

Mr. Roberts: Subject to the proviso that such buildings must be offered in the first instance to other Government Departments for Government use, my right hon. Friend would be prepared to endorse this proposal when it comes forward.

University Grants (Expenditure)

Mr. Whitaker: asked the Secretary of State for Education and Science what is the current level of expenditure of public funds by way of grants to the universities.

Mr. Goronwy Roberts: £224 million.

Mr. Whitaker: I thank my hon. Friend for that reply. Does he agree that it's inappropriate, in view of the Franks Commission's revelation of the disinclination of the present Warden to administer it as an educational establishment, for any portion of this money to go to All Souls' College, Oxford?

Mr. Roberts: All Souls' College, Oxford, like other Oxford and Cambridge colleges, is not in receipt of Exchequer grant.

School Transport

Mr. Ian Gilmour: asked the Secretary of State for Education and Science if he is satisfied with the response of local authorities to his request for them to review their school transport arrangements; and if he will make a statement.

Mr. Redhead: My right hon. Friend relies on local education authorities to use the discretion given to them under the Act. He does not ask them to give him detailed information.

Mr. Gilmour: As this is a matter which affects a great many children in rural areas, ought not the hon. Gentleman to take it seriously and bother to find out what is happening?

Mr. Redhead: I assure the hon. Gentleman that we do take it seriously. While not having precise information as to the response to my right hon. Friend's circular letter when he urged upon authorities, on 12th February last year, the importance of being flexible and generous in these arrangements, we know that many authorities use their discretionary powers with a great deal of flexibility and generosity.

Poverty and Educational Progress

Mr. Winnick: asked the Secretary of State for Education and Science what research is being undertaken by his

Department to study the link between poverty in low-income households and educational progress in schools.

Mr. Crosland: At least ten research projects supported by my Department, and costing in all about £290,000, have a bearing on this subject.

Mr. Winnick: I appreciate that reply, but will not my right hon. Friend agree that there are at present still too many children suffering in their school work as a result of coming from homes where there is a very low income? Will he try to persuade his colleagues to change the present system whereby the wage-stop is applied?

Mr. Crosland: There are far too many children coming from such homes, and I have no doubt whatever that this has an extremely deleterious effect on their educational performance. But, of course, the solution to this problem goes far beyond anything we can do within my Department.

Comprehensive Education

Mr. Brooks: asked the Secretary of State for Education and Science what advice or instructions he proposes to give local education authorities on the problems entailed for children who, in transferring from one area to another, pass from one form of comprehensive secondary education to another.

Mr. Redhead: None, Sir. They have considerable experience of dealing with problems of greater difficulty under existing arrangements.

Mr. Brooks: Does my hon. Friend agree that, among the schemes suggested in Circular 10/65, some are perhaps a good deal more comprehensive than others, and will he agree, also, that real difficulties may be experienced by adolescent pupils, for example, who transfer from a Leicestershire-type scheme to a Doncaster-type scheme?

Mr. Redhead: I am reasonably confident that the introduction of comprehensive education will make it generally easier to deal with children of secondary school age who move from one area to another, despite some shades of difference between the degree of comprehension which may exist in different areas.


Certainly, the local education authorities have bigger problems now in catering for children who may transfer from one area with a tripartite system to one which has a comprehensive system.

Direct Grant Schools (Comprehensive Education)

Mr. Brooks: asked the Secretary of State for Education and Science whether he will now send a further circular to local education authorities on the policy they are to pursue in fitting direct-grant schools into the emerging pattern of comprehensive secondary education.

Mr. Crosland: Not at present.

Mr. Brooks: Is my right hon. Friend satisfied with the somewhat hesitant and even equivocal way in which the negotiations have been conducted in some parts of the country under the terms of Circular 10/65?

Mr. Crosland: The picture varies very much between different parts of the country, and, of course, the problem varies very much in its character between different parts of the country. Having laid down our policy in Circular 10/65, that we wanted to see negotiations take place between authorities and the direct grant schools, we would not have been justified n taking a different attitude until the plans asked for under the circular had actually come in.

Mr. Neave: Is the right hon. Gentleman aware that some authorities are finding that they are very short of time for consultation in accordance with the circular, and will he be prepared to postpone submission of these schemes in certain cases?

Mr. Crosland: I certainly would not be prepared to allow a general postponement for authorities as a whole, but any authority has the right under the circular to ask for a postponement. We have already granted postponements in eight cases where we thought there were special difficulties.

Space Research

Mr. Geoffrey Lloyd: asked the Secretary of State for Education and Science what studies he is making for a British scientific satellite as a successor to the proposed U.K.3.

Mr. Goronwy Roberts: The opportunities for United Kingdom scientists to fly experiments in E.S.R.O. and N.A.S.A. satellites are likely to absorb the funds available for space research in the near future. This does not, however, exclude the possibility of a successor to U.K.3 at a later date.

Mr. Lloyd: Having regard to the time scale in the planning and preparation of these experiments, should we not now be carefully studying a successor to this satellite which is due to be launched next year?

Mr. Roberts: As the right hon. Gentleman said, we expect that this third in the Ariel series may be launched early next year, but this is a matter which must be decided in relation to the general scientific research programme and on the very best advice. My right hon. Friend is, of course, advised on this as on cognate matters by the Science Research Council and the Council for Scientific Policy.

Building Costs

Mr. J. E. B. Hill: asked the Secretary of State for Education and Science on what costs per school place his 1968–69 building programme is based; and to what extent these will be increased by the effect of the selective employment tax.

Mr. Hunt: asked the Secretary of State for Education and Science whether he will revise the present cost limits for primary and secondary school places.

Mr. Redhead: The present cost limits per place are £230 and £435, respectively, for new primary and secondary schools. My right hon. Friend expects to be able to make an announcement soon about new cost limits.

Mr. Hill: Does not that make nonsense of the figures in the National Plan, which were given as £190 for a primary school place and £338 for a secondary school place? Will not the figures in the National Plan, ! therefore, have to be substantially revised?

Mr. Redhead: I do not agree with the hon. Gentleman's conclusion. The figures in the Answer relate to gross costs per school place.

Mr. Hunt: Does not that Answer mean that the present limits are totally unrealistic, and does it not equally mean that


this must inevitably result in a serious lowering of standards in school building?

Mr. Redhead: With that proposition, similarly, I would not agree.

Future of Education

Sir H. Harrison: asked the Secretary of State for Education and Science whether he will recommend the setting up of a Royal Commission to inquire into the whole field of future education.

Mr. Crosland: No, Sir.

Sir H. Harrison: Is the right hon. Gentleman aware that that reply will give a great deal of disappointment to many schoolmasters who are the men carrying out the task of education on the ground and who feel that so many decisions are being taken rather piecemeal that now is the time to have a review of the whole of our education at all stages right through to university level?

Mr. Crosland: The reply may come as a disappointment, but it will hardly come as a surprise, as I have now been making this reply for very nearly 12 months. The fact is that we have and have had in the recent past a great many advisory bodies and committees of inquiry and so on into the education service. It cannot be maintained at the moment that we need another, and the only consequence of setting up another would be to delay decisions which should be taken rapidly.

County Junior School, Humberston

Sir C. Osborne: asked the Secretary of State for Education and Science if he will issue instructions to his department that, when protests similar to those made in the case of the siting of the County Junior School, Humberston, near Grimsby, are made, they are dealt with immediately.

Mr. Crosland: I have written again to the hon. Member about this.

Sir C. Osborne: This school is being built within a yard or two of the houses of my constituents, who protested first to the parish council, the R.D.C. and the county council, and then, through me, to the right hon. Gentleman. There are two fields beyond which they ask for

the school to be moved away from their houses. Will not the right hon. Gentleman have a heart and look at this matter again?

Mr. Crosland: As for the protest, the hon. Gentleman wrote to me on 17th May and I wrote back two days later, which shows that I took up the matter as rapidly as I could. The fact is that we have local democracy in this country—[HON. MEMBERS: "Oh."]—and as soon as one begins to interfere with the siting of a particular building one is taking crucial powers from local authorities, and that I am not prepared to do.

11-plus Examination

Mr. Winnick: asked the Secretary of State for Education and Science what action he proposes to take regarding those local education authorities who submit proposals arising from Circular 10/65 which are aimed at continuing the 11-plus examination in one form or other.

Mr. Crosland: Local education authorities are not asked to reply to my Circular 10/65 until 12th July. The remaining parts of this Question therefore relate to hypothetical circumstances.

Mr. Winnick: Is my right hon. Friend aware that a number of Tory-controlled councils are or will be submitting to him quite bogus proposals which will continue the 11-plus in one form or another? Is he also aware that parents in those areas will expect some firm action from him?

Mr. Crosland: If bogus schemes are submitted, I shall reject them.

Sir G. Nabarro: Local democracy!

Mr. Charles Morrison: How does the right hon. Gentleman reconcile Circular 10/65 with local democracy?

Mr. Crosland: That is a question which might well be addressed to a number of right hon. Gentlemen on the Opposition Front Bench who have also occupied this post. The fact is that it is a long established tradition in this country that while the Government do not interfere with detailed local decisions, such as where to site a school, nevertheless it is the function of the Government to lay down the broad lines of national education policy, and that it what we have done.

Sir E. Boyle: The right hon. Gentleman will agree, however, that the Question of the hon. Member for Croydon, South (Mr. Winnick) follows rather ironically on the second half of the supplementary answer which the right hon. Gentleman gave on the preceding Question. Does not the right hon. Gentleman agree that in the months ahead it will be much more important to scrutinise very severely some non-viable schemes for comprehensive education by some Labour-controlled authorities rather than to force comprehension on authorities which are already fulfilling their statutory duty by providing a full range of opportunity?

Mr. Crosland: There is nothing in the slightest ironic in the juxtaposition of these two Questions. The right hon. Gentleman knows perfectly well that we have always left detailed questions, such as the siting of a school, to local authorities and I hope that we always shall. But it must be the responsibility of the Government, of whatever complexion, to lay down the broad lines of education policy. As to scrutinising schemes, my main worry at the moment is that expressed by my hon. Friend the Member for Croydon, South (Mr. Winnick)—that we may have some rather bogus schemes from Conservative authorities. But the 'fight hon. Gentleman knows perfectly well that I have always scrutinised schemes with the greatest of care, even when they have come from Labour authorities.

Mr. Longden: Is the right hon. Gentleman satisfied that he is acting constitutionally in seeking to alter by Ministerial circular the intentions of Parliament as to secondary education as laid down in the Education Act, 1944?

Mr. Crosland: I am perfectly satisfied, and none of the associations concerned, nor the Opposition Front Bench, has ever suggested that I was acting unconstitutionally.

Mr. David Watkins: Would not my right hon. Friend agree that there is nothing democratic about the 11-plus selection system and all that goes with it?

Schools (Outside Toilets)

Mr. Freeson: asked the Secretary of State for Education and Science at how many schools outside toilets are still

being used; and how many of these are not fully roofed.

Mr. Redhead: In 1962, when the school building survey was carried out, 17,378 schools had mainly out-of-door sanitation. The survey did not distinguish between lavatories with roofs and those without. To obtain information about improvements since the survey would require a special enquiry of all authorities.

Mr. Freeson: Will my hon. Friend undertake some kind of inquiry along these lines? Would he not agree that it is quite deplorable that there are many schools with sub-standard toilet and sanitary accommodation while there is a considerable amount of unnecessary social building by private enterprise in the localities concerned? There is quite a lot in my district alone.

Mr. Redhead: I am conscious of the deficiencies in this respect in many schools, and I regret that it will not be possible to get rid of all outside lavatories in schools for some time, but that is no reason why conditions in them should not be made hygienic and tolerable. However, the authorities are very busy at the moment and this matter would not justify a special inquiry.

Sir S. McAdden: Will the hon. Gentleman consult his right hon. Friend to discover whether local education authorities would be satisfied to know that in the opinion of the Ministers the function of those authorities is the siting of schools and the siting of toilets?

Mr. Redhead: I will certainly consult my right hon. Friend.

Commonwealth Immigrants

Sir D. Renton: asked the Secretary of State for Education and Science what have so far been the effects upon the public education system of England of the need to educate large numbers of children of Commonwealth immigrants; what extra numbers of children have been involved during the past two years; and whether he will make a statement.

Mr. Redhead: The effects have been confined to the few areas much affected. Extra numbers have sometimes increased staffing difficulties, particularly in places short of teachers, and there have been some teaching problems particularly


where the children know little or no English. The presence of classes with a large exotic element has sometimes altered the character of lessons, not always for the worse. Approximately 49,000 children of all ages under 16 were admitted from Commonwealth countries for settlement to the United Kingdom during the two years 1964 and 1965.

Sir D. Renton: Is the hon. Gentleman aware that dependants are still coming in in large numbers and going to live in places where classes are already full? What are the Government to do about it?

Mr. Redhead: A careful watch is being kept on this. It is impossible to generalise, because, as the right hon. and learned Gentleman will appreciate, the problem is that of only a small minority of schools in a limited number of areas. But in all respects a very careful watch is being kept. Where local education authorities have shown that they need extra teachers, their quota has been increased to make provision for them.

Commonwealth Countries (Seconded Personnel)

Mr. Tilney: asked the Secretary of State for Education and Science what encouragement he gives to local education authorities to second their personnel for a tour in overseas countries of the Commonwealth; and whether those volunteering to go will lose or gain promotion in their home-based jobs.

Mr. Goronwy Roberts: I am sending the hon. Member a copy of the current issue of "Why not teach for a time Overseas?" The aim is to encourage local education authorities to second teachers to serve overseas without fear that their professional advancement will suffer and with confidence that due credit will be given for experience gained abroad.

Mr. Tilney: Is the hon. Gentleman aware of the agreement between Nigeria and the Greater London Council in this matter, and will he call the attention of other local democracies to that agreement?

Mr. Roberts: I am aware of this arrangement, and I am sure that the publicity arising from this Question and Answer will serve to bring this matter to the attention of other authorities.

New Primary School, Helsby

Mr. Carlisle: asked the Secretary of State for Education and Science whether, in view of the representations he has received and the need for a new primary school in Helsby, he will include this school in the 1967–68 building programme; and whether he will make a statement.

Mr. Redhead: My right hon. Friend is considering proposals by local authorities for the 1967–68 programe, but he cannot yet announce which will be included.

Mr. Carlisle: Will the hon. Gentleman bear in mind, when making that consideration, that this school in an expanding area is genuinely needed? Will he confirm that Cheshire Education Authority has included this school in its applications in the previous two years? Finally, would he be prepared to accept a petition, signed by the residents, in support of the school?

Mr. Redhead: All relevant facts will be taken into consideration. My right hon. Friend has arranged for the proposed deputation from the authority to be received by the Department.

Redbridge (Secondary Education)

Mr. Iremonger: asked the Secretary of State for Education and Science when he expects to be able to announce his decision on the Redbridge Borough Council's response to his circular requiring education authorities to submit plans for the reorganisation of secondary education in the future.

Mr. Crosland: When I have received the authority's scheme and have had an opportunity to study it.

Mr. Iremonger: Will the right hon. Gentleman deal with this with reasonable dispatch, and will he prepare his mind to receive a model compromise between wasteful and unnecessary destruction of existing excellent schools and willingness to experiment for the future?

Mr. Crosland: I shall certainly deal with the matter with reasonable dispatch. Whether it is a model I cannot say until I have seen it.

Sir J. Rodgers: Do the right hon. Gentleman and his Government adhere


to the Universal Declaration of Human Rights, and, if so, will he bear in mind Article 26(3) which says:
Parents have a prior right …"—

Mr. Speaker: The hon. Gentleman must not quote but make himself responsible for everything in his Question.

Sir J. Rodgers: With all respect, Mr. Speaker, if you will bear with me in patience for a minute or two, you will see the relevance——

Mr. Speaker: I am not interested in relevance; I am interested in order.

Independent Schools

Mr. J. E. B. Hill: asked the Secretary of State for Education and Science if he will give the number and percentage of independent schools recognised as efficient which are charities.

Mr. Onslow: asked the Secretary of State for Education and Science how many indpendent schools which are recognised as efficient are not charities; and how many of these provide boarding facilities.

Mr. Redhead: Complete information is not available. 385 (or 25 per cent.) are registered as charities and 373 (or 24 per cent.), which are provided by religious orders, are thought to be charities. It is estimated that about 250 of the remaining 787 will be registered as charities. Boarding facilities are provided at 542 of these 787.

Mr. Hill: Is it not inequitable and anomalous that a substantial proportion of this most important sector, recognised as efficient in education, will therefore suffer the proposed discrimination in the Selective Employment Tax? Does not the Minister agree that it is very important that, if there is to be a selective tax, remission should extend to all teaching and learning?

Mr. Redhead: I should like to make it clear that there is no question of discrimination against those independent schools which are not charities. All services, public and private, will bear the tax. The Government are offsetting the elect on local authorities in order to protect the ratepayers and on charities because of the hardship which might otherwise be caused to some institutions.

Mr. Onslow: Can the Minister say what representations, if any, he has made to the Chancellor about the effect of this new tax on the cost of boarding places? Does he propose that the element of this which is matched from public funds in the case of local authorities and the Overseas Diplomatic Service shall be increased?

Mr. Redhead: These matters have all been covered in the representations received and in the decisions of the Government.

Sir E. Boyle: Is the hon. Gentleman aware that, whatever the intentions of the tax, the figures which he has disclosed this afternoon will strike people as representing a completely indefensible anomaly educationally, and that we shall certainly press this matter very hard?

University Medical Centres

Mr. Henig: asked the Secretary of State for Education and Science how many universities have their own medical centres; and how many of these centres have a psychiatric section.

Mr. Goronwy Roberts: Nearly all universities have some form of student health service. I understand that this service does not as a rule include psychiatrists but where necessary refers students to the appropriate specialist for treatment.

Mr. Henig: Would my hon. Friend not agree that it is an appalling state of affairs, when so many students at universities have minor psychotic disturbances, that they should either be sent to a relatively untrained person, who will probably administer tonic and an aspirin, or that they should be sent to a nearby mental hospital where they will meet people in a far worse condition than themselves?

Mr. Roberts: It is the policy of the University Grants Committee to encourage the development by universities of student health services. This is a matter for the university concerned. Such services are expected to be developed in co-operation with the National Health Service, which is available to students, as to the rest of the population.

School Building Programmes (Delays)

Mr. Charles Morrison: asked the Secretary of State for Education and Science to what factors he attributes delays by local education authorities in starting their school building programmes.

Mr. Redhead: There are many factors, and any attempt at a short summary would be misleading. My right hon. Friend is discussing the whole question with the local authority associations and he will be glad to have a word with the hon. Member.

Mr. Morrison: Would not the hon. Gentleman agree that by speeding up the machinery for approving school building plans within his own Department some delays could be avoided? Could not further delays be avoided by announcing programmes further in advance, so there would be less hold-up as a result of difficulties in acquiring sites?

Mr. Redhead: I am conscious of the fact that there have been some delays, and we have looked into our internal position. I am bound to say that we have not revealed any great evidence of delay inside the Department. If the hon. Member will send me details of any particular cases which he has in mind I will certainly look into it.

Primary and Secondary Education (Transfer Age)

Mr. Charles Morrison: asked the Secretary of State for Education and Science how many local education authorities have notified him of their wish to adopt an age transfer, other than 11 years, from primary to secondary education.

Mr. Crosland: A number of authorities have discussed possible schemes of this nature with my Department, but so far no proposals have been formally presented for my statutory approval.

Mr. Morrison: Would not the right hon. Gentleman agree that this points to the fact that there is a great deal of uncertainty as to the right age for transfer? Would he not further agree that this illustrates the absolute foolhardiness

of issuing Circular 10/65, or any circular on secondary education, before the Plowden Committee has reported?

Mr. Crosland: No, Sir. On the contrary, I think, under present circumstances, that there is a very strong case for a temporary measure of local option over the age of transfer. Quite apart from comprehensive reorganisation, this will greatly facilitate the raising of the school-leaving age in many areas. What we have said clearly is that there will be no question of going over to any different national age of transfer until the Plowden Committee has reported.

Secondary Education (Reorganisation)

Mr. Hornby asked: the Secretary of State for Education and Science whether he will extend the time limit for submission by local education authorities of their proposals for secondary reorganisation.

Mr. Crosland: No, Sir. I have considered, and will consider, individual requests for extensions where there are exceptional circumstances.

Mr. Hornby: Does not the right hon. Gentleman find from his own inquiries that a very heavy burden of work is being borne by local education authorities as a result of the secondary reorganisation requirements which in some cases have got in the way of urgent work of another kind—for instance, the school-building programme? Does he not think that it would have been better to have fully considered plans rather than rushed ones from local authorities?

Mr. Crosland: I am quite aware that Circular 10/65 has imposed a heavy burden of work on a number of authorities, particularly county authorities with very scattered and divers areas. As I said in reply to an earlier Question, we have already granted a small number of extensions, and if a case is put up to us for an extension in order to produce a proper scheme then we shall consider it sympathetically.

Mr. R. C. Mitchell: Will the Secretary of State undertake to scrutinise very carefully all applications for an extension of the time limit to ensure that the reasons for that extension are genuine and not just delaying tactics by certain reactionary authorities?

Voluntary Service (Report)

Mr. Bob Brown: asked the Secretary of State for Education and Science when he hopes to report the findings of he Bessey Committee on voluntary service by young people.

Mr. Redhead: The Report on Service by Youth was published on 3rd June, 1966.

Mr. Brown: Is my hon. Friend aware of the concern felt by that very fine, prganisation, International Voluntary Service, at the delay in implementation?

Mr. Redhead: My right hon. Friend, proposes to make a considered statement about the implementation of the Report and hopes to do so as soon as possible.

Private Schools (Teachers)

Mr. Arnold Shaw: asked the Secretary of State for Education and Science whether he will introduce legislation to impose a staffing quota on schools in the Private sector.

Mr. Redhead: No, Sir.

Mr. Shaw: Because of the disparity of the teacher-pupil ratio between private and public schools, would not my right hon. Friend agree that it is inequitable that the schools in the private sector have recourse to so many teachers who have been trained at public expense?

Mr. Redhead: I have a great deal of sympathy with my hon. Friend's point of view, but there are a number of serious practical difficulties in applying a quota to the staffing of independent schools. My right hon. Friend feels that it would be appropriate to await the views of the Public Schools Commission on the whole question of integrating public schools with the maintained system of education before dealing with this point.

Teachers (School Meal Duties)

Mr. Arnold Shaw: asked the Secretary of State for Education and Science whether he will now make arrangements to relieve teachers of all duties in connection with school meals.

Mr. Redhead: No, Sir. The arrangements in force for the supervision of school meals were agreed with local education authorities and the teachers' associ-

ations, and they are designed not to involve individual teachers in unreasonable burdens.

Mr. Shaw: Would not my right hon. Friend agree that if something were done in this direction teachers would be assured of the real intentions of the right hon. Gentleman in the use of auxiliaries in schools?

Mr. Redhead: The positon is well understood by the teachers' associations, in that they were parties to the agreement and know how this works in practice in its application by local education authorities.

Eisteddfods (Arts Council Grants)

Mr. Tinn: asked the Secretary of State for Education and Science what financial assistance was given in the year 1965–66 by the Welsh Arts Council to the Llangollen Eisteddfod, and to the National Eisteddfod of Wales in the year 1964–65; and what assistance has been offered by the Arts Council of Great Britain to the Tees-side International Industrial Eisteddfod 1966.

The Joint Under-Secretary of State for Education and Science (Miss Jennie Lee): In 1965–66 the Welsh Committee of the Arts Council gave the Llangollen International Eisteddfod a grant of £1,000, and in 1964–65 spent approximately £2,000 in aiding the National Eisteddfod of Wales. The amount offered by the Ants Council of Great Britain to the Tees-side International Industrial Eisteddfod 1966 is £500 in the form of a guarantee.

Mr. Tinn: While recognising that my right hon. Friend has no direct responsibility for the detailed allocations, may I ask her whether she would agree that there is a rather serious and depressing contrast between the size of these grants, bearing in mind that the Tees-side International Industrial Eisteddfod is a first-time event, bearing a greater burden of risk, and is estimated to cost £23,000?

Miss Lee: Yes, Sir. But, as I think my hon. Friend knows, these matters are left entirely to the judgment of the Arts Council, in which I have complete confidence, and the North-Eastern Association for the Arts gets a considerable grant from the Arts Council which can, if it pleases, supplement this amount.

Royal Shakespeare Company, National Theatre and Royal Opera House

Dame Irene Ward: asked the Secretary of State for Education and Science what will be the effect of the Selective Employment Tax on the finances of the National Theatre.

Mr. Chichester-Clark: asked the Secretary of State for Education and Science what will be the effect of the Selective Employment Tax on the finances of the Royal Shakespeare Company.

Mr. Berry: asked the Secretary of State for Education and Science what will be the effect of the Selective Employment Tax on the finances of the Royal Opera House, Covent Garden.

Miss Jennie Lee: The Royal Shakespeare Company, the National Theatre and the Royal Opera House are all charities and as such will receive a refund of tax under the Selective Employment Payments Bill.

Dame Irene Ward: I thank the right hon. Lady for the information. May I congratulate her on her Privy Councillorship and on having triumphed over the Chancellor of the Exchequer, whose idiotic decision in the beginning filled everybody with gloom?

The Arts (Grants)

Dame Irene Ward: asked the Secretary of State for Education and Science whether he is satisfied with the way in which the Arts Council assesses and distributes national and local subsidies for the arts; and if he will make a statement.

Miss Jennie Lee: I have the highest confidence in the ability of the Arts Council to fulfil this difficult and important task with skill and impartiality.

Dame Irene Ward: But is the right hon. Lady aware that the secretary of the North-Eastern Association for the Arts, Mr. Dunbar, has made grave complaint about not having the grant which will be paid to the Association told to the committee in time to make its forward estimates? Although the Arts Council may do a jolly good job, we could do with the matter being speeded up a little on the North-East Coast.

Miss Lee: If the hon. Lady will talk further with Mr. Dunbar——

Dame Irene Ward: I have never spoken to him.

Miss Lee: I am sure that Mr. Dunbar will be willing to tell the hon. Lady some of his secrets and will inform her that he had advance information about the amount to be granted. The Arts Council is now working on three-year forward planning, because, clearly, before projects can not only be got off the ground but kept off the ground, it should have adequate advance information.

Mr. Blenkinsop: Is my right hon. Friend aware that we in the North-East are very grateful for the greater support which we are now getting in the development of the arts? Will she encourage regional organisations elsewhere in the country to be the main channel through which arts support is passed on?

Miss Lee: We are doing quite well by leaving the initiative to come from local areas. We have four well off the ground and eight coming forward. We believe that this is the way to get the best results.

Building Projects and Improvements

Sir E. Boyle: asked the Secretary of State for Education and Science whether all local education authorities have now been advised of the major school building projects which are to be included in the 1967–68 programme; and what is the value of the improvement projects which he has approved for that programme, other than those needed to prepare for the raising of the school leaving age.

Mr. Crosland: I hope to announce the second part of the programme by the end of this month. I expect that the programme will make an appreciable contribution to the improvement of existing schools.

Sir E. Boyle: On the second part of the Question, in 1965–66 and 1966–67 the volume of school improvements was a little over £25 million for each year. Can the right hon. Gentleman say approximately what the amount will be for 1967–68?

Mr. Crosland: I should not like to give a figure simply because it is increasingly impossible to distinguish between


improvements and other forms of school building. Many of the buildings put up in anticipation of raising the school leaving age will have an improvement element in them. When a
slum school is replaced by a new school on a new housing estate, this is clearly an improvement, although it has not been defined as such in the past. To isolate a particular figure can only be misleading.

North-East Technological University

Sir E. Boyle: asked the Secretary of State for Education and Science what was he result of the urgent examination into tie possibility of creating a completely new technological university institution in tie North-East, which he announced in his statement of 24th February, 1965.

Mr. Crosland: This is still being examined.

Sir E. Boyle: Is the right hon. Gentleman aware that his Answer is extremely disappointing, bearing in mind what he said about the urgent examination he was carrying out as long ago as February, 1965? This is one of the many matters which we shall certainly wish to raise in the university debate.

Mr. Crosland: It is an extremely serious question whether to create an entirely new university, expensive as that must be and at a time when we have 43 universities in this comparatively small country. Given how serious the question is, I make no apology at all for taking a reasonable time to consider it.

Mr. Shinwell: When my right hon. Friend has come to a decision about this technical university, will he consider siting it in an appropriate place-for example, in the new town of Peterlee, in my constituency?

Mr. Crosland: One of the striking flings in this matter is how many appropriate places there appear to be.

Mr. R. W. Elliott: Is the Minister aware that during the General Election campaign Labour candidates in the North-East made a great deal of propaganda value out of this proposal and many others which have not been implemented? Does the right hon. Gentleman realise that the North-East demands action, not words, from the right hon. Gentleman?

Mr. Crosland: Labour candidates generally put up a very good case on all aspects of Government policy.

Information Storage and Retrieval

Mr. J. H. Osborn: asked the Secretary of State for Education and Science what information the Office of Scientific and Technical Information has about codes and procedures for information storage and retrieval; and whether he will now make a statement as to the best system for adoption nationally, bearing in mind the need to fit in with any international networks and the need to give advice to research associations and institutes carrying out research in the suitable system for their own specific needs at the present time.

Mr. Goronwy Roberts: The Office for Scientific and Technical Information is in touch with those responsible for the principal national and overseas plans for mechanising the dissemination, storage and retrieval of information. Many systems are being developed, but rigorous evaluation of their efficiency and economic merits is only just beginning and it is therefore not possible to say whether any one system will emerge as decisively the best.

Mr. Osborn: Is the hon. Gentleman aware that this is now becoming an urgent problem, and is he satisfied that he is getting enough support at Government level?

Mr. Roberts: Yes, absolutely. The O.S.T.I. is supporting some very important experimental projects. It is continuously in touch with organisations in this country and overseas, and it is also working very closely with A.S.L.I.B. in order to meet the objectives which the hon. Gentleman mentions.

Sir E. Boyle: While recognising the difficulty of asking questions at this time of day, may I ask the hon. Gentleman if he would not agree that it is of great urgency that this evaluation should go forward, and that the retrieval of information will be a subject of growing importance in the years ahead? Will he undertake that this matter will be pushed forward by his Department?

Mr. Roberts: It is being pressed forward, but I take the point made by the right hon. Gentleman in his supplementary question.

10, DOWNING STEET (PRESS OFFICERS)

Mr. Ridley: asked the Prime Minister how many official Press officers are employed at 10, Downing Street.

The Prime Minister (Mr. Harold Wilson): Three of the rank of senior information officer or above.

Mr. Ridley: Would it not be better if these official Press officers were used for "leaking" the private meetings of the Parliamentary Labour Party so that we might hear both sides of the story and get it right?

The Prime Minister: Unlike the previous Government, we do not use Government servants for doing party work.

Mr. J. E. B. Hill: Do the three Press officers include the Prime Minister's special private photographer?

The Prime Minister: I have not got a special private photographer.

Mr. Heath: In view of what the right hon. Gentleman has said about the staffing of No. 10, can he confirm that they had nothing to do with the issue of the news release of his statement yesterday to his own party meeting and, in particular, that they were not responsible for putting on the Press hand-oust of his speech:
All press releases are issued on a check against delivery basis"?

The Prime Minister: This was done, appropriately, by the party secretariat. The right hon. Gentleman will understand that misleading accounts of what I said might lead to a lot of misunderstandings abroad. Since it was a party occasion, it was put out by the party secretariat, because, as I say, we do not believe in spending Government money in keeping expensive Ministers engaged on party work.

Oral Answers to Questions — MINISTER OF LABOUR RESPONSIBILITIES)

Sir K. Joseph: asked the Prime Minister if he will define the responsibilities of the Minister of Labour in relation to the Government's prices and incomes policy.

The Prime Minister: I would refer the right hon. Gentleman to the Answer given on 25th May by my right hon. Friend the First Secretary of State to a Question by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon).

Sir K. Joseph: But can the Prime Minister say how the duties there laid on the Minister of Labour to carry out the incomes policy so far as the earnings of the private sector are concerned can be reconciled with the Minister's traditional responsibilities for conciliation?

The Prime Minister: Of course they can be reconciled. It is Government policy to carry out the prices and incomes policy. My right hon. Friend has a duty for conciliation. I hope that the right hon. Gentleman is not suggesting that my right hon. Friend, in his conciliation duties, should be pursuing a prices and incomes policy different from that which I thought was accepted by all parties in the House. My right hon. Friend is not a schizophrenic.

Sir C. Osborne: Does the Prime Minister still regard the prices and incomes policy as important? Can he save it, or will he abandon it altogether?

The Prime Minister: We regard it as important and we regard it as essential, as we have said very many times. So far as its future is concerned, of course it is running, and has run, into many difficulties because of the special problems in introducing it when there are anomalies in our wage and salary and incomes structure. We have had our fair share of difficulties, but we intend to persist with the policy.

Mr. Heath: Is there not a very important point of principle here, in that the functions of the Minister of Labour as a Minister for conciliation—he is responsible under the Act for conciliation and has officers in his Department responsible for conciliation—can conflict with the incomes policy of any Government? In these circumstances, which course is he to pursue? Surely this is a major matter of principle which should be decided by any Government.

The Prime Minister: There would be a conflict if one thought that my right hon. Friend's conciliation duties were simply to split the difference between the


employers and the trade union concerned without regard to the national interest. It must always be the duty of any Government—I am sure that the right hon. Gentleman agrees—to have regard to the third party to every bargain, namely, the public and the national interest. Having seen my right hon. Friend at work in tie last two or three days on one of the most difficult problems, I see no difficulty or conflict in the duties imposed on him.

Oral Answers to Questions — FIRE AND AMBULANCE SERVICES (AMALGAMATION)

Dr. Winstanley: asked the Prime Minister if he will arrange that measures similar to those being taken to amalgamate police forces shall be taken to amalgamate the fire services and ambulance services in the same areas.

The Prime Minister: The future organisation of these services is being kept under review but, as I am sure the hon. Member appreciates, it does not necessarily follow that arrangements appropriate to the police will prove right for them.

Dr. Winstanley: Will the Prime Minister not agree that these three services are very much interdependent and that they are also very frequently required to act jointly? Is he not aware that under the present systems, difficulties arise due, for example, to the three services using different radio wavelengths and frequencies between one area and another? Would not substantial benefits accrue if the three services were administered so as to be responsible for identical areas?

The Prime Minister: I agree that the three services work very closely together and have to be integrated in their operation to a considerable extent. The reason for my right hon. Friend's decision on police forces is the fact that we are trying to combat crime which is now organised on a basis far transcending local government and even regional boundaries. That raises different questions with regard to the fire and ambulance services. No doubt the Royal Commissions will be looking at these questions. If we felt, earlier than their reports, that further action should be taken, we should take it.

Oral Answers to Questions — EUROPEAN FREE TRADE ASSOCIATION

Mr. Heffer: asked the Prime Minister what steps the British Government are taking to strengthen the European Free Trade Association; and if he will make a statement.

The Prime Minister: The European Free Trade Association Ministerial Council has established a programme of work to this end which is being carried out through various specialist committees and working parties.

Mr. Heffer: Would my right hon. Friend not agree that it would be far better to strengthen E.F.T.A. at this stage rather than making any unilateral move to join E.E.C.? Would it not be acceptable that a strengthened E.F.T.A. could then negotiate with E.E.C. towards wider European unity?

The Prime Minister: I do not think that either the present Government or the previous one felt that a strengthened E.F.T.A. was incompatible with improving our relations with E.E.C. and establishing the conditions on which we could join E.E.C. It ought to be helpful towards that end rather than the opposite. So far as discussions between E.F.T.A. and E.E.C. are concerned, that was dealt with at the Vienna Conference last year, and we hope that conditions will soon be such in E.E.C. that these discussions can take place.

Mr. Eldon Griffiths: Whether one thinks of E.F.T.A. or E.E.C., is it not a fact that the Government's recent handling of European affairs has worsened our relations with both?

The Prime Minister: No, Sir, quite the contrary. Our relations within E.F.T.A., which is the subject of the Question, are extremely good and constructive at the moment. The same is true about our relations with E.E.C. Before we can make progress towards becoming involved, they have some problems which they want to sort out for themselves.

Oral Answers to Questions — POPULATION TRENDS

Sir D. Renton: asked the Prime Minister what steps are taken by Her Majesty's Government to predict future trends of population, to influence such


trends, and to ensure that social policies are planned in accordance with a realistic and acceptable policy of controlling immigration and encouraging emigration.

The Prime Minister: The right hon. and learned Gentleman's Question covers a very wide field, but if he will let me know the particular points he has in mind I will write to him.

Sir D. Renton: If I may express the matter generally, may I ask the right hon. Gentleman if he accepts that the strain upon our physical resources due to overcrowding creates the most serious social and economic problems? Will he show a good deal of awareness of the problem?

The Prime Minister: Although our population is forecast to rise to nearly 75 million by the end of this century, I would not go so far as to suggest that even by that time, if we use our national resources, including land, wisely, we shall be an overcrowded island. There are many problems. If the right hon. and learned Gentleman will mention any of them, I will be very glad to go into them either by letter or by a statement in the House.

Mr. Rowland: Is my right hon. Friend aware that, according to a Parliamentary Answer that I had last year, immigration represents a net increase of only 7 per cent. in the population and that it is the rise in the expectation of life and the high birth rate which are more serious factors in what I regard as a disturbing trend?

The Prime Minister: It is a fact that the rise in the expectation of life is, as much as anything, responsible for the projections of population. We have a tremendous problem to find land now, but it is a problem mainly caused by housing difficulties and slum clearance, and we have to tackle that problem before we can consider whether we have a more difficult problem in the years to come.

Mr. Ronald Bell: Is not the probable density of population in the southern part of the island in the next 25 years a matter of the gravest concern? Does the right hon. Gentleman not agree that various things like immigration and natural growth are cumulative? Is anything being

done to follow up the policy statement of the former Home Secretary, Sir Frank Soskice, that the Government would consider giving financial assistance to immigrants who wish to return to their countries of origin?

The Prime Minister: With regard to the southern part of the island, to which the hon. and learned Gentleman refers, it is precisely because of the distortion of our industrial distribution and the over-congestion of that area that we have been giving increased priority to the problem of enhancing the industrial attractiveness of many other parts of the country, including my right hon. Friend's very important statement yesterday about industrial development in Wales. So far as immigrants are concerned, I have nothing to add at present to our White Paper and successive statements by my right hon. Friends. If the hon. and learned Gentleman cares to put down a Question on that specific issue, I will see that it is answered.

COMMONWEALTH PRIME MINISTERS' CONFERENCE

Mr. Boston: asked the Prime Minister what representations have been made to Her Majesty's Government that the next Commonwealth Prime Ministers' Conference should take place in a country other than the United Kingdom; and if he will make a statement.

The Prime Minister: Various suggestions have been made but Commonwealth Prime Ministers decide the time and place of their meetings collectively and consultations are still going on. The House will, of course, be informed when a decision has been taken.

Mr. Boston: Does my right hon. Friend agree that there may be some benefit in holding some Prime Minister's Conferences in other Commonwealth countries, and can he say whether that is receiving favourable consideration at the moment? Can he give any indication when the next Commonwealth Prime Ministers' Conference will take place, and where?

The Prime Minister: My hon. Friend will be aware that for the first time this year we held a full Commonwealth Prime Ministers' Conference outside this


country. It is a good thing to do, and I think that we should do it at frequent intervals, but I would not like to see them all transferred out of the country. I am not in a position to say where and when the next Commonwealth Prime Ministers' Conference will take place. I think that it will he in the next two or three months but I am not sure where.

Mr. Thorpe: Irrespective of where the next Commonwealth Prime Ministers' Conference takes place, would it not be helpful if it could take place before any irrevocable decision is reached with regard to the future of Rhodesia?

The Prime Minister: The Question is about the place and not about irrevocable decisions. If the hon. Gentleman wishes to widen it to that extent, the question of Rhodesia is central in all Commonwealth discussions at present. Some Prime Ministers would like to see an urgent conference now, and others would prefer to wait until the autumn. In any event, we must let the Secretariat continue its consultations before we can see what is most generally acceptable to my colleagues.

AUSTRALIA (E.L.D.O. AND WOOMERA RANGE)

Mr. Biggs-Davison: asked the Prime Minister when he last discussed the European Launcher Development Organisation and the use of Woomera with the Australian Prime Minister.

The Prime Minister: If the hon. Gentleman means oral discussions, Mr. Holt has not, of course, been to London as Prime Minister, and there was no need to discuss these questions on Sir Robert Menzies' last visit. I am, of course, in touch with the Prime Minister of Australia in other ways.

Mr. Biggs-Davison: Is not the use of Woomera by E.L.D.O. an excellent example of the Europe/Commonwealth co-operation which we all desire? Was the right hon. Gentleman in full consultation with the Australian Prime Minister throughout the recent stop-go over E.L.D.O., and is he also in touch with him over the possible use of a launching site at Darwin, as well as of Woomera?

The Prime Minister: The hon. Gentleman is absolutely right. The Woomera range has represented a useful European/ Commonwealth link-up in this way. We have been in continuous touch with the Australian Government during the past few months while we have been trying to deal with the problem of the escalation of costs in E.L.D.O. The hon. Gentleman will be aware that there are very strong pressures within E.L.D.O. for using another testing range which is not in Australia.

MINISTER OF AVIATION

Biggs-Davison: asked the Prime Minister whether he will take steps to replace the Minister of Aviation with a Minister of Aerospace.

Mr. Arthur Probert: asked the Prime Minister whether he will make a statement on the future of the Ministry of Aviation.

The Prime Minister: As this answer is rather long, I will, with permission, deal with it at the end of Question Time.

MINISTRY OF AVIATION

The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I would like now to answer Question No. Q10 with, for the convenience of the House, unstarred Question No. 21.
The House will know that the question of the future of the Ministry of Aviation has been under consideration for some time. The issues involved obviously raise a fundamental and difficult question, namely whether Ministerial responsibility for the production industry concerned should be associated with the responsibility for the management of the airlines, who are, amongst others, the customers of that industry, or whether the aircraft industry, which is a significant part of the engineering industry, should not be handled Ministerially together with the rest of the engineering industry.
In addition, there is the fact that a very considerable proportion of the nation's research and technological resources are engaged within the aircraft field, and this, together with the declared policy of the Government to transfer more and more of its resources front


defence to civil production, including the development of export trade, provides a further case for ending the present division on the industrial side.
Problems arising out of responsibility for the airline corporations and broader issues, many of them international—including relations with the International Air Transport Association—have much in common with the problems associated with the national and international aspects of the shipping industry, for which the Board of Trade is responsible. The Government, have, therefore, decided that the responsibility for the aircraft industry should, in due course, pass to the Ministry of Technology as should most of the research and development functions. Responsibility for civil aviation will go to the Board of Trade.
For similar reasons, the shipbuilding industry, responsibility for which has been in the Department responsible for the shipping industry, namely, the Board of Trade, will also be transferred to the Ministry of Technology since it has become more and more illogical to separate marine engineering from other aspects of the engineering industry. Most of these decisions will take effect in the autumn.
I had considered an earlier transfer of all civil aviation functions to the Board of Trade, but with the urgent decisions still to be taken about future purchasing programmes of the airline corporations, I thought it right to leave responsibility for the supervision of the air corporations and independent airlines in the hands of my right hon. Friend the Minister of Aviation until those decisions had been taken. We shall, however, immediately be transferring to the Board of Trade all other aspects of civil aviation.
I should, perhaps, add that while it is intended that the greater part of the research and development work at present conducted by the Minister of Aviation will be transferred to the Ministry of Technology, a comprehensive examination is now being undertaken to determine to what extent procurement responsibilities of the Ministry of Aviation might more appropriately be transferred to the Ministry of Defence. This examination will be completed before the Ministry of Technology takes on these new responsibilities.

Mr. Biggs-Davison: Despite what the Government has done to the British aircraft industry, does it not deserve better treatment than this? On the question of space, which was part of the subject of my Question, can the Prime Minister say whether he now intends to bring together under one head this great question, which is at present the responsibility, I believe, of six different Ministers? Does the Prime Minister believe that Britain, which has led at sea and in the air, should now try to catch up in space?

The Prime Minister: In reply to the last point raised by the hon. Member, which was in his main Question, both the previous Government and we ourselves have had to take this decision. A considerable number of Ministers are concerned with space. While it might be convenient from one point of view to put it all into one Department, there are many questions affecting E.S.R.O. as well as E.L.D.O. on all these issues and I do not think that the best answer is simply to combine it all into one Department.
With regard to the general question and the hon. Member's preamble to his question, it is a very difficult decision to know whether to have the vertical or the horizontal pattern. I am bound to say that when the Ministry of Aviation was set up I was converted to the view that that was right. We all realise, however, particularly after reading the Plowden Report, what has gone wrong with that industry and what are its problems going back over four, five or, perhaps, even 10 years. On the whole, I think it right that this industry, which is so central a part of the engineering industry and of electronic research, should be combined, with its departmental responsibilities, with the rest of engineering and electrical engineering.

Mr. Rankin: The statement which my right hon. Friend has made is one of extreme complexity. Would it not have been advisable to discuss it in the light of a debate on the Plowden Report? Will we have an opportunity of debating the Plowden Report and also the statement which my right hon. Friend has just made? Will he recollect that civil aviation has been pushed around on other occasions and has been lodged with the Ministry of Transport and found not to work?

Mr. Speaker: Order. This is a Question, and on Questions only short supplementary questions may be asked.

Mr. Rankin: This is a short but important one, Mr. Speaker. Did my right hon. Friend the Prime Minister also give thought to the fact that if civil aviation was transferred to the Board of Trade that Department might make as big a mess of it as did the Ministry of Transport?

The Prime Minister: Civil Aviation was never in the Ministry of Transport during the currency of the present Government.

Mr. Rankin: No, the previous Tory Government.

The Prime Minister: Turning my mind back to the beginning of my hon. Friend's question, I agree that my statement was complex, but it was not 1 per cent. as complex as the problem with which I was dealing, as, I think, my hon. Friend will recognise. Secondly, as I have said, there is the big problem of whether to put the Department which is responsible for aircraft production and the customers of the industry into one or whether to try to get a grouping of engineering industries-in other words, vertical or horizontal. It is a very difficult decision.
Certainly, I do not think that this matter could be postponed longer until final decisions are taken on the Plowden Report, although my right hon. Friend the Minister of Aviation will be concerned with that. The question of debate, whether on the Plowden Report or on what I have said today, is a matter for my right hon. Friend the Leader of the House.
I forget the fifth part of my hon. Friend's supplementary question, but the answer to the sixth part is that I do not agree that the Ministry of Transport, even under the previous Government, made a hash of civil aviation. It is quite wrong to say that it did. There are, however, enormous difficulties, concerning both civil aviation and the aviation industry, and this is probably the right answer that we have found.

Mr. R. Carr: Can the Prime Minister tall us whether the aerospace industry was consulted in full about these changes,

and, if so, whether it agreed with both the principles and their timing? Secondly, whatever may be the merits of these changes—and at first sight we are a little doubtful about them—is it not folly to make such an administrative upheaval of this kind when so many fundamental problems of the aircraft industry are in the melting pot and when the attention of Ministers and officials will inevitably be distracted from making the urgent vital policy decisions which must be made?

The Prime Minister: I am to see representatives of the aerospace industry. I should say right away that I think they will be against these decisions, I think that I am right to say that.
With regard to the question of timing, if we were to say that we should not make changes which are believed to be necessary as long as there are all the problems that the aircraft industry is facing, we should never make them. We want to get into a posture in which these decisions can be properly considered.
As to implementation of the Plowden Report and decisions consequent upon that, my right hon. Friend the Minister of Aviation will have time while he is still within his Department to deal with that question.
There are also, as I have mentioned, the important decisions about the future purchasing programmes of both the national and the independent airlines. That is why we are not immediately transferring that part of civil aviation to the Board of Trade.
If the right hon. Gentleman has the shipbuilding side in mind, the first stage of the implementation of the Geddes Report on Shipbuilding is being handled by the Board of Trade. That will provide a convenient point for transferring it to be dealt with with the rest of the engineering industry in the Ministry.

Mr. Probert: While congratulating the Prime Minister on making these arrangements, which are much more in conformity with present-day requirements, may I ask him to assure me that the staff concerned will be fully consulted about the necessary changes?

The Prime Minister: Yes, Sir. For many years there has been a problem of


anxiety about the future among the staffs of the Ministries concerned. I think that this will provide a permanent solution and security for them to be able to do their work in what I think is the right interdepartmental setting.
As the right hon. Gentleman said, the aviation industry has gone through a very tough time over recent years. The Plowden Report gave its version of why that was. It has had an over-concentration of defence expenditure. It has also failed to develop as it should have developed on the civil side. We believe that putting it with the engineering industries will help it to face a better future—a better situation than it has faced in the past few years.

Mr. Lubbock: Will the Prime Minister bear in mind that if he is making an announcement of this importance it is much better to make it by means of a statement than by answer to a Question? May I ask him two questions? First, does he intend to introduce legislation giving effect to these changes during the current Session? Secondly, will he say something about the guided weapons side of the aircraft industry? Is this to be under the Ministry of Technology?

The Prime Minister: I think that I should have used exactly the same words if I had been making a statement. I cannot see that there would have been very much difference. There were Questions down by the hon. Member for Chigwell (Mr. Biggs-Davison) and by my hon. Friend the Member for Aberdare (Mr. Probert), and I thought it convenient to answer them.
Much of this can be done by Order, but if there is any legislation necessary, it will be introduced in time to meet the timetable which I have had in mind.
Guided missiles come under my concluding words, in which I said that certain aspects of procurement responsibilities on the defence weapons side are being looked at, at the moment, to see which of these responsibilities should be transferred to the Ministry of Defence.

Mr. Shinwell: When the Prime Minister said that shipbuilding would be transferred to the Ministry of Technology, did I understand him to say that shipping would be transferred there, too? [HON. MEMBERS: "No."] I am sorry if I mis-

understood my right hon. Friend. May I, then, ask him whether he has finalised this position, or whether this is merely an outline of what is in contemplation?

The Prime Minister: These are firm Government decisions. Of course, where legislation and Orders are concerned, they are subject to the authority of the House. I said about shipbuilding, as I said about aviation, that there is a case for it being with shipping, which is with the Board of Trade, and there is a case for it being with the rest of the metal-using and engineering industries. On balance, we think that the second alternative is the right answer. But shipping is to stay in the Board of Trade.

Sir G. Nabarro: Is the Prime Minister aware that the greatest concentration of scientific manpower affected by his announcement today is at the Royal Radar Establishment, at Malvern, in Worcestershire? As that establishment works for the Ministry of Defence, for the Ministry of Aviation and for the Board of Trade in maritime and nautical matters, will the Prime Minister say whether it is the intention to fragment it, to disperse it, or to pass it in total to a new Ministerial parent and, if so, which parent?

The Prime Minister: The Royal Radar Establishment, like other Royal establishments, for example, Farnborough, has a tremendous record, as the hon. Member knows, over a very wide field, both defence and civil. The importance of these establishments is growing in the civil field and particularly in electronic developments for exports. There is no question at all of fragmenting the establishment. It will continue as it is. I think that I am pretty safe in saying that this establishment will pass, with the rest of responsibility for the electronics industry, to the Ministry of Technology.

Mr. Woodburn: Is the Prime Minister aware that the future of the country depends on being in the forefront of engineering and science skill and that this engineering science and skill is indivisible? He is to be congratulated, therefore, on trying to bring all the research and development in engineering as far as possible into one comprehensive circle. Is he aware that aerospace, especially, is revolutionising the whole engineering industry and that the skill and


science from it must be made available to all the rest of industry in this country?

The Prime Minister: My right hon. Friend had a very close experience of these matters Ministerially before many hon. Members opposite, who obviously disagree with him, were even Members of the House. I very much agree with what he said. One of the trends in the last two or three years has been the growing importance of these industries in the civil field as opposed to the defence field, or as well as in the defence field. That is why we think it right that they should be unified in one Department which has a special civil as opposed to defence orientation.

Sir J. Eden: Is it not unfortunate that the Prime Minister has not taken this opportunity to announce a firm decision on the matter of military procurement? What will be the relationship between the Minister of Technology and the Ministry of Defence in respect of the acquisition and sale of military equipment?

The Prime Minister: This matter is at present being considered—indeed, it has peen under consideration for some little time—between the Departments concerned o see exactly what the boundaries should But clear defence issues, including nuclear defence questions, are matters for ihe Ministry of Defence.

Mr. Robert Howarth: Does the Prime Minister not feel that to divide responsibility for the growing field of transport will introduce the possibility of delay still further into an industry which has already suffered more than enough from indecision in the past?

The Prime Minister: Whatever we do Ave have to divide some responsibility. Today, civil aviation is divided from shipping in the international field and from internal transport in the domestic transport field. What we are doing by this operation is to ensure that civil aviation, with its vast international ramifications, will be in the same Department as shipping, which also has great international ramifications. It would not be possible to amalgamate all these and domestic transport, too.

Mr. Heath: I agree with the Prime Minister that decisions on these matters

involve a very nice balance of responsibility, but whatever conclusions one reaches, is it not important that they should not be implemented until the major decisions affecting the industry which the Prime Minister has mentioned have in fact been taken, in particular on the question of military procurement?
Is it not also important that the balance between military and civil procurement should also be maintained and that military procurement should not receive supremacy over civil procurement? As the Prime Minister said that he will discuss these matters with the industry tomorrow, may I ask whether he will confirm that these decisions are liable to reversal by the Government in the usual way?

The Prime Minister: I did not say that I was going to discuss it with industry tomorrow. The right hon. Gentleman must have got his information from somewhere else. [HON. MEMBERS: "A leak."] Quite probably it was a leak. I did not say when it was.
I agree that this is a very nice balance, and I certainly agree with the right hon. Gentleman that we want to strengthen the civil as opposed to the military side because of the trend in industry. That is the basis of what we are trying to do. The major decisions have been taken. What is being looked at in defence procurement is only the marginal question of the drawing of the boundaries. For example, where there is an aircraft which is primarily defence, there is a strong case for defence handling the development of that aircraft, but where, as in so many cases, it has a big civil application, one can see the argument going the other way. This has been the problem throughout between aviation and defence and we are trying to solve that difficult problem.

HONG KONG (FLOODING)

The following Questions stood upon the Order Paper:

Dame JOAN VICKERS:: 69. Dame JOAN VICKERS: To ask the Secretary of State for the Colonies if he will state the number of lives lost and the amount of damage caused by the recent floods in Hong Kong; and what action Her Majesty's Government will


take to help restore prosperity to the colony.

Mr. FISHER: To ask the Secretary of State for the Colonies whether he will make a statement about the recent flood disaster in Hong Kong.

Mr. RANKIN: To ask the Secretary of State for the Colonies whether he will make a statement on the Hong Kong disaster.

The Secretary of State for the Colonies (Mr. Frederick Lee): With permission, I will now answer Questions Nos. 69, 70 and 71 together. Exceptionally heavy rainfall—[Laughter.] I am surprised that hon. Gentlemen opposite find this a subject for laughter—on 12th-13th June caused serious flooding in low-lying areas and over 100 severe land-slides. Over 15 inches of rain fell in a period of 29 hours.
The provisional death-roll is 49, with an additional 11 persons presumed dead and 20 missing, and 61 persons have been injured. About 7,500 people are homeless or have been evacuated from damaged buildings and 41 boats have been reported sunk. Communications on Hong Kong Island have been disrupted and there has been extensive damage to roads, drains, waterworks and other public utilities, and to property.
Her Majesty's Forces in Hong Kong are giving all possible assistance in the work of rescue, relief and repair. As a token of their sympathy, Her Majesty's Government have decided to contribute £5,000 to the Colony's Community Relief Trust Fund.
I am sure that all hon. Members will wish to associate themselves with this decision. An advance is being obtained from the Civil Contingencies Fund pending submission of the necessary Supplementary Estimate.

Dame Joan Vickers: I thank the right hon. Gentleman for his reply. I am sure that all hon. Members will wish to offer their sympathy to the relatives of those who died.
Is the right hon. Gentleman absolutely certain that all necessary warnings are given to the population about changes in weather conditions? Will he in future try to see that the temporary buildings, in which so many of the people live,

are now replaced by permanent buildings? Does he not think that £5,000 is a very small and inadequate amount to offer to such a loyal and faithful Colony?

Mr. Lee: I am told that there is no actual shortage in the trust fund, which at present stands at about £100,000. I will keep closely in touch with the Governor about this, although I do not believe that there is any difficulty from the point of view of the supply of money.
To answer the hon. Lady's question about damage, there was extremely serious flooding in the low-lying urban areas of Hong Kong Island and in the new territories. I understand that the situation was aggravated by a number of very severe landslides.
Thirty permanent houses were destroyed and 32 were damaged, while 71 huts were destroyed and 129 were damaged. There has been a great problem of communications, but I understand that all essential supplies have been able to get through.

Mr. Fisher: Would the right hon. Gentleman agree that Hong Kong, which has helped itself so magnificently to work and prosper since the war, is now entitled to expect adequate financial assistance from us in the work of rehabilitation which will be necessary following this disaster? What plans has he for giving serious financial help, because the £5,000 which he announced really is derisory?

Mr. Lee: I pointed out that there is no suggestion of there being a shortage of finance at the moment which might be holding up the restoration services. I also said that there is about £100,000 in the Trust Fund. From our communications with the Governor, I understand that finance is not a problem at the moment, although we are keeping closely in touch on this issue. If there are any ways in which we can be of further assistance the House may be assured that Her Majesty's Government will assist.

Mr. Rankin: In sending our united sympathy to Hong Kong, would my right hon. Friend note that had the ordinary people of Hong Kong been housed in more substantial dwellings, instead of the fragile structures in which they are accustomed to living, there would have been very many fewer casualties than did, in fact, occur? Would he draw the


attention of the Governor to this fact before rebuilding takes place?

Mr. Lee: I have no reason to suppose that what my hon. Friend says is the case. Quite a number of permanent houses were destroyed. However, I am keeping closely in touch about the situation and if there are any new developments of the type mentioned by my hon. Friend, I will report them to the House.

Mr. David Steel: Would my right hon. Friend say what technical assistance has been and will be given by the troops stationed in Hong Kong in any rescue and reconstruction work that may be necessary?

Mr. Lee: I am not certain about the question of technical assistance. Troops are working with the civil authorities and have been working with them since the operation became necessary. I cannot at this stage go into detail on the technical points, but if my hon. Friend will put down a Question I will answer it.

EUROPEAN LAUNCHER DEVELOPMENT ORGANISATION (PRESS REPORTS)

Mr. Heath: Mr. Heath (by Private Notice) asked the Prime Minister whether he has instituted an investigation into the circumstances in which the Cabinet's decision to withdraw from the activities of E.L.D.O. was published in the Press on 3rd June.

The Prime Minister (Mr. Harold Wilson): The right hon. Gentleman must take responsibility for the alleged facts in his Question. He can, however, rest assured that in such cases of statements in the Press, however misleading their conclusions, which purport to involve leaks from governmental sources, appropriate inquiries are made. This is happening in this case.

Mr. Heath: We can well understand the Prime Minister's decision to inquire into this case, which led to the publication by the Foreign Office of a statement three days later and the reaction to which then led the Government to reverse their policy. Who will be responsible for carrying out such an inquiry? Will the Paymaster-General play any part in it? Will the activities of members of the

Government be inquired into and will the right hon. Gentleman report to the House in due course?

The Prime Minister: The right hon. Gentleman, who has carried out the almost unprecedented act of putting down a Private Notice Question in this case 10 days after the event, is obviously taking this matter very seriously. [HON. MEMBERS: "Oh."]—as I am myself. I said "as I am myself", and it shows how the "Peterborough" column has inspired him.
In this question the right hon. Gentleman went into a long alleged factual account of what happened. I do not know whether I would be in order in answering all of it, but, to answer the concluding part of it, I am myself responsible, with the officials normally concerned with such matters, for this inquiry. This will be done, as has been the case under previous Governments, under my direction.
There have been in past years, for
many years, a whole succession of leaks, accurate and inaccurate, about aviation matters. When I was in opposition I went so far as to think—I now realise a little unfairly—that this must have been attributable to the then Minister of Aviation. I now realise that there is a more continuing problem here, and it is right that this should be said. This is being inquired into in this particular case, but I could not agree that the right hon. Gentleman should conclude everything he has concluded as a result of what happened on the Friday, Saturday, Sunday and Monday.

Mr. Heath: May I press the Prime Minister a little further? Will the inquiry also go into the activities of members of the Government, and will the right hon. Gentleman make a report to the House when the inquiry is finished?

The Prime Minister: As soon as I have anything to report, quite unprecedentedly, which the right hon. Gentleman opposite never did, I will certainly report anything to the House which can be said if any conclusions emerge from this. Again, I do not know what was the practice of previous Governments. I have my suspicions. All such inquiries must cover everyone who had access to any information which might have been emitted on this occasion.

Mr. R. Carr: Will the right hon. Gentleman include in his inquiries a report which appeared, I think as long ago as last Friday, foreshadowing the statement about the Ministry of Aviation which he has just made?

The Prime Minister: I said that there is a rather continuing problem in this Ministry which has gone on for a long time under successive Governments. I said that I might have been unfair in ascribing it to the incontinence of a particular Minister who is no longer a Member of this House. [HON. MEMBERS: "Oh."] I said that I might have been unfair. Will not hon. Gentlemen opposite allow me to say that?
As I said, it is a continuing problem which, I think, plagued previous Governments. It plagues us and we are trying, as they did, to get to the bottom of it.

Mr. Onslow: Would the Prime Minister confirm that these inquiries will also include the interviewing of Mr. Chapman Pincher?

The Prime Minister: I think that it is not usual in these cases to interview journalists. But, certainly, he is one of a very considerable number of journalists who have printed a series of stories, a few of them reasonably accurate but most of his, recently, totally inaccurate, as the whole House knows.

BUSINESS OF THE HOUSE

Mr. Heath: May I ask the Leader of the House whether he will state the business of the House for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Herbert Bowden): Yes, Sir. The business for next week will be as follows:
MONDAY, 20TH JUNE, TUESDAY 21ST JUNE, and WEDNESDAY, 22ND JUNE.—Finance Bill.
Further progress in Committee.
THURSDAY, 23RD JUNE—Second Reading of the Selective Employment Payments Bill.
Motion on the Double Taxation Relief (Taxes on Income) (U.S.A.) Order.
FRIDAY, 24TH JUNE—Private Members' Bills.
MONDAY, 27TH JUNE—The proposed business will be: Finance Bill.
Committee stage, continued.

Mr. Heath: Can the right hon. Gentleman say what the position will be about the emergency powers when the Proclamation expires on Thursday, 23rd June, should the seamen's strike continue? Will he take note that if he is proposing to renew these powers I am sure that the House will wish to have a full day's debate on them, in view of the undoubted seriousness of the situation?
Secondly, can he give an assurance that in the situation in which the Government find themselves, where they are under tremendous pressure because of their own business, it will still be possible to provide the Supply days allocated to the Opposition, and to arrange a foreign affairs debate, before we rise for the Recess?

Mr. Bowden: The Government's view is that the remaining five Supply days and the two Consolidated Fund days will be offered to the Opposition before the end of July. We hope that if there is a request for a two-day debate on foreign affairs, in accordance with the usual practice the Opposition will provide one of them.
Under the Emergency Powers Act, 1920, the current Proclamation expires on Wednesday of next week. If it is thought necessary to continue it, it will have to be done by the Privy Council on that date, and regulations will have to be approved by both Houses within seven days thereafter. I have noted the right hon. Gentleman's request for a full day's debate on the regulations, and I think that we had better discuss this through the usual channels.

Mr. Dickens: Will my right hon. Friend make arrangements for an early debate on the Government's defence policy in the light of the Prime Minister's statement yesterday, which contained no reference whatsoever to the economic implications of such a policy?

Sir G. Nabarro: On a point of order. Is it in order for the hon. Member for Lewisham, West (Mr. Dickens) to make reference to a statement by the Prime Minister, other than in this House? Was not the statement referred to, and reported


as a matter of speculation, from a Committee Room, unbugged, upstairs, and the reports in the Press due to leaks by hon. Gentlemen opposite?

Mr. Speaker: That is a very long point of order. I think that the hon. Member was referring to statements which, I gather, were in the Press this morning.

Sir G. Nabarro: Not in the House.

Mr. Bowden: My hon. Friend and Members of the House will be aware that almost all the time between now and the end of July, or maybe mid-August, is taken up by the Finance Bill, Supply days, and so on. I shall consider requests for debates, but I can make no further promise.

Mr. Fletcher-Cooke: Can the right hon. Gentleman say when we are to have a While Paper on broadcasting, and can he give an undertaking that it will come at least before 13th July? Unless it does, we cannot question the Postmaster-General until December. Finally, will the right hon. Gentleman ensure that there is a debate on it as soon as it is published?

Mr. Bowden: I recognise the importance of a debate on broadcasting, and the importance of issuing a White Paper. I cannot at this stage promise any firm date, but we will do our best to meet the House in this respect before rising for the Summer Recess.

Mr. Buchan: In view of my right hon. Friend's statement that he will consider giving time for debates, will he keep in mind Motion No. 82, in the names of my hon. Friends and myself, in connection with a move towards possible disengagement within Europe?
[That this House welcomes the policy of the Roumanian Government as expressed in the speech of Mr. Nicolae Ceausescu, calling for the abolition of the Warsaw and N.A.T.O. Pacts and the withdrawal of foreign troops as the necessary basis for a new relationship between the countries of Europe, considers this a positive step towards a European déetente, calls upon the British Government to give the Roumanian proposal its fullest support; and further calls upon the British Government to take a new initiative by again putting forward the Rapacki-Gaitskell proposals, or similar

proposals for a Nuclear-Free Zone, and a policy of disengagement.]
May I remind my right hon. Friend that the Rapacki-Gaitskell proposals called for a nuclear-free zone in Europe, and may we also discuss with the same detail our policy west of Suez?

Mr. Bowden: I have said that there is likely to be a two-day debate on foreign affairs between now and the end of July, but my right hon. Friend the Secretary of State for Foreign Affairs answered Questions at length on this subject on Tuesday.

Mr. Stodart: Does the right hon. Gentleman recollect that on Tuesday night a Prayer on a most important subject—the Hill Sheep Orders—was unable to be called? Can he say whether he will furnish alternative time for it to be debated, and, if so, when?

Mr. Bowden: I recognise that the Prayer was withdrawn and that there is little praying time left. We will see what can be done to get it in next week.

Mr. Michael Foot: We were all gratified to see the statement issued by the Minister of Power recently about taking the steel industry into public ownership. Can my right hon. Friend say when the Bill will be published, and will he give an assurance that the Second Reading debate will take place before the end of July?

Mr. Bowden: I cannot give a date at this moment. I shall do my best to arrange the Second Reading debate before we rise for the Summer Recess.

Mr. Bryan: May I take it that the right hon. Gentleman's answer to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) about the White Paper on broadcasting policy means at least that we shall have that White Paper for certain before the Recess?

Mr. Bowden: It means that we shall produce the White Paper as soon as possible. The hon. Gentleman will be aware that there are some intricate problems of finance involved here, which is the main reason for the delay in producing the White Paper.

Mr. Grimond: Apart from the debates on the different stages of the Finance


Bill, can the right hon. Gentleman arrange for an early general debate on the economic situation, in view of the seamen's strike and the balance of payments position?

Mr. Bowden: No, Sir. I cannot promise a full day's economic debate in addition to the one that we had during the Budget, unless the Opposition should choose it on a Supply day.

Mr. Winnick: Does my right hon. Friend agree that the occasional two-day debate on foreign affairs is completely inadequate, and means, in fact, that over a period of time only a very small number of hon. Members are allowed to participate in discussions on foreign policy?

Mr. Bowden: The two-day foreign affairs debate at this time of the year usually proves to be adequate, because there are debates on foreign affairs earlier in the Session on the Queen's Speech.

Mr. Biggs-Davison: With a view to the foreign affairs debate and other discussions on defence and overseas affairs, will the Government please consider publishing as a White Paper the public statement made by the Prime Minister at a private meeting?

Mr. Bowden: No, Sir. I do not think that this is necessarily a subject fir a White Paper. It has been reported in the Press, and that should be sufficient.

Mr. Orme: While welcoming my right hon. Friend's statement giving us a two-day debate on foreign affairs before the Recess, may I ask him to be more explicit about the subjects which will be covered? Many of us on this side of the House would like to discuss specifically the situation in Vietnam.

Mr. Bowden: I am prepared to receive representations from any part of the House about how the two days should be divided up.

Dame Irene Ward: May I ask what action the Government propose to take about my Motion which refers to the lack of suitable women on the Royal Commission on Local Government Reform?
[That, in the opinion of this House, the Royal Commission on Local Government for England lacks any representation to fulfil with knowledge an essential in local government, namely, the requirements for the elderly, the disabled, the mentally and physically handicapped, the social services, for children and others, and for health, for family life; that local government without happiness for the community is arid and that to consider local government only through the high technical qualifications of the appointed members without representatives to ensure that social and community needs are equally full explored will provide only a modern shell for life without warmth or security; and requests Her Majesty's Government to add additional members, including more women, to the English Royal Commission.]
I am not asking for a debate, because the right hon. Gentleman can act without one. In view of the fact that the Government are supposed to be interested in having women's views on these important matters—and not just technical women—they should——

Mr. Speaker: Order. The hon. Lady can ask for time for a debate, but she cannot argue the merits of if

Dame Irene Ward: In that case, may I ask for time for a debate? I thought that I was saving the right hon. Gentleman's time by just explaining what I wanted.

Mr. Bowden: I cannot promise the hon. Lady time for a debate. I think that her fears are unfounded. The members of the Royal Commission have have been carefully selected, and they provide a wide range of experience.

Mr. Henig: May I ask my right hon. Friend whether he has seen Motion No. 84?
[That this House welcomes the announcement that the selective employment tax will be repaid in full to charities, but considers that the Charities Act 1960 should he amended to define a legal charity and that all such organisations should be registered under the Act.]
In view of the considerable financial advantage now open to "phoney" charities, will my right hon. Friend find time


for the Government to introduce legislation to amend the Charities Act, 1960?

Mr. Bowden: We cannot give time in the immediate future, certainly not during this Session. The 1960 Charities Act was a result of the Report by a Committee under the chairmanship of Lord Nathan. There was considerable discussion on the Bill. I have checked on this, and I doubt very much whether the subject is ripe for discussion and new legislation.

Mr. Peyton: As it was not possible for the Minister of Power to be present yesterday when we had a debate covering many aspects of fuel policy, will the Leader of the House arrange another day when it may be convenient for his right hon. Friend to attend when we can have another debate on fuel policy?

Mr. Bowden: Any further debate on fuel policy other than anything which may arise on the Finance Bill, as was the case yesterday, will have to come out of Supply if it is wanted between now and the end of July.

Mr. Heffer: Would my right hon. Friend reconsider his reply about the debate on foreign affairs? Many hon. Members wish to participate in debates on foreign affairs, but never have the opportunity. It is very difficult to talk in terms of policies east of Suez, Vietnam, the European situation and just about every other foreign question at the same time. The debates are getting into a confused state. Would my right hon. Friend reconsider this matter, so that we can have more specific debates on specific issues?

Mr. Bowden: It ought not to be assumed that the two-day foreign affairs debate which we have at this time of the year and the earlier opportunity in the Queen's Speech are the only opportunities for debating foreign affairs. In fact, there are the normal opportunities of half-hour Adjournment debates and the Recess Adjournment debates. These may always be used for this purpose.

Mr. Jopling: May I again ask the right hon. Gentleman to find time next week for a debate on the Prayer carried over from Tuesday night of this week? This is of vital and fundamental importance to thousands of farmers. I hope

that the Government will not evade it in the week ahead.

Mr. Bowden: I am most anxious that, when Prayers are put down, they should be debated. We shall certainly try to find time for it next week. If we should fail next week, if for any reason it is not reached, we will look at the position subsequently.

Mr. Hector Hughes: In view of the unnecessarily prolonged debate yesterday upon this year's Finance Bill, and the number of subjects awaiting discussion, as evidenced by the questions which have just been asked, will the Leader of the House seek an arrangement with hon. Members on the other side to shorten their speeches, so that more time may be allocated to other hon. Members and other subjects before the Recess?

Mr. Bowden: With respect to my hon. and learned Friend, it is extremely dangerous to assume, after the first day, that we will have prolonged discussions upon the Finance Bill.

Mr. Robert Cooke: If we cannot have the White Paper on broadcasting before the Summer Recess, can we have a little leak from the Lord President's Office, perhaps in the House?

Mr. R. Carr: In view of the most important implications of the announcement which we have just had from the Prime Minister about the Ministry of Aviation, on what is probably, after all, the most important industry from the point of view of this country's advanced technology, would the right hon. Gentleman consider the possibility of producing a White Paper and finding time for a debate, for which I think that there is support on both sides of the House?

Mr. Bowden: I am certainly prepared to look at the question of a White Paper, but, as I have said, almost the whole of the spare time between now and the end of July is in the hands of the Opposition. It may be, as the Prime Minister pointed out, necessary to have Orders or a Transfer of Functions Bill, which would provide an opportunity for a debate. I will look at this matter.

Mr. Iremonger: When does the right hon. Gentleman expect us to be able to debate his Motion on Ten Minute Rule


Bills? Would he assure us that it will be debated not after exempted business, but at 10 o'clock or a reasonably early hour? Secondly, has he seen my Motion on "Up the Junction"?
[That this House takes note of the British Broadcasting Corporation's intention of re-showing the television feature Up the Junction which gave offence to certain sections of the public and about which honourable Members are receiving protests from constituents; welcomes the current tendency of the British Broadcasting Corporation to recognise frankly and portray convincingly the realities of contemporary life, some of which are not altogether new, either; and believes such recognition and portrayal to be in the great tradition of English literature and art, but urges the British Broadcasting Corporation to affirm and proclaim through its other programmes the undoubted danger and evil of fornication, adultery and sodomy, not in stale and implausible terms of fire and brimstone, but rather in terms of modern insight into the deepest needs and fullest potential of the human personality; and further urges the British Broadcasting Corporation fully to exploit every opportunity, including its wilting satirical programmes, to uphold and extol the institution of Christian and all other formally constituted and loyally maintained monogamous marriages.]

Mr. Bowden: I understand that the B.B.C. has decided not to proceed with the reshowing of this somewhat interesting programme.
On the hon. Member's first point, with regard to Standing Order No. 13, it is not intended to take it next week.

Mr. Costain: Is the right hon. Gentleman aware that, during the Committee stage of (the Building Control Bill, it was proved by our side of the Committee to be unnecessary? Does the fact that it has not been included in the last two weeks' business mean that the Government have abandoned it?

Mr. Bowden: No, Sir.

Mr. Lubbock: May I return to the question put by the hon. Member for Liverpool, Walton (Mr. Heffer) and ask the Leader of the House whether he has

noticed Motion No. 86, on east of Suez, signed by my hon. Friends the Member for Aberdeenshire, West (Mr. James Davidson) and others, as well as an hon. Member opposite? Does he not think that it would be a good idea to follow the example set by the Parliamentary Labour Party in debating this matter, but on this occasion to have the debate on the Floor of the House? If he is not able to find time for such a debate during the normal sittings of the House, would he not consider having a morning sitting specially devoted to this subject?
[That this House, in order to reduce defence costs, calls for a decisive reduction in our military commitments east of Suez by 1970, including withdrawal from existing bases in Malaysia, Singapore and the Persian Gulf, and for negotiations with Australia and our other allies to provide base and servicing facilities for a mobile British task force if required.]

Mr. Bowden: I always think it worth while to follow the example set by the Parliamentary Labour Party, but I cannot promise time for a debate on the Floor of the House, unless the subject is selected by the Opposition as a Supply subject between now and the end of July. The hon. Member will appreciate that if we were to do this on any Wednesday morning, we should require the day before to get authority to do so.

Mr. Heath: With regard to the right hon. Gentleman's references to the provision of Supply days by the Opposition, as he knows, we usually co-operate on the foreign affairs debate, but is it not unfair to ask us to provide more? Have not the right hon. Gentleman and the Government got their priorities wrong for business before we rise? Why has he promised the hon. Member for Ebbw Vale (Mr. Michael Foot) time for the Second Reading of the Bill to nationalise the steel industry yet refuses the House time to debate the worsening economic situation? Why is he allowing his hon. Friends below the Gangway to damage the economy and preventing the rest of us from having the time to advise the Chancellor of the Exchequer how to put it right?

Mr. Bowden: The right hon. Gentleman will be aware that, because of the General Election at the end of March, the Government generously decided to


provide Supply time for the Opposition, which was not done on a previous occasion by the Government of which he was a member in 1955, when no Supply time was provided. It is, therefore, not unreasonable to ask for some of that time to be used to debate subjects in which hon. Members are interested.
On the question of my promise, I have given that promise to my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), because the Second Reading of the Iron and Steel Bill is part of the programme between now and the end of July.

Mr. Edward M. Taylor: Has the right hon. Gentleman seen the Annual Report of British Railways, published earlier this week? It reveals a very alarming financial position and the need for some urgent policy decisions. Will we have an opportunity of discussing this Report, which is serious and alarming?

Mr. Bowden: Three days are supplied in any Session of Parliament for debates on the nationalised industries. This Report could be selected, if it is so wished.

Mr. Gibson-Watt: Would the Leader of the House please tell the House when he intends to take the annual debate on Welsh affairs? Would he not tell us that the answer is "In October", as that would be unacceptable?

Mr. Bowden: I cannot help the hon. Member with the date at the moment, but we shall have the debate.

Mr. Whitaker: Would my right hon. Friend please consider making arrangements for the showing to Parliament of the film alluded to in the Motion tabled by the hon. Member for Ilford, North (Mr. Iremonger)?

Mr. Bowden: The question of showing films is a matter for application to the Serjeant at Arms by individual hon. Members and not by the Government.

Mr. McMaster: In view of the great length of time since the publication of the Geddes Report and its importance, particularly in the light of the Prime Minister's statement today, would the right bon. Gentleman say whether we will debate this Report before the Recess?

Mr. Bowden: I should like to be able to find time, but I cannot give a firm promise.

Mr. Michael Foot: Mr. Michael Foot rose——

Mr. Speaker: Order. I have said before that, unless the House instructs me otherwise, I do not propose to start a second round of business questions. I hope that the hon. Member for Ebbw Vale (Mr. Michael Foot) will understand.

Orders of the Day — FINANCE BILL

Further considered in Committee [Progress, 15th June]

[Sir ERIC FLETCHER in the Chair]

Clause 11.—(GENERAL BETTING DUTY)

4.20 p.m.

Mr. W. R. Rees-Davies: I beg to move Amendment No. 80, in page 12, line 8, after "than" to insert:
on an approved horse racecourse or a licensed track or".
I understand, Sir Eric, that it is for the convenience of the Committee that with this Amendment we discuss Amendment No. 81, in page 12, line 12, leave out paragraph (c).
Before you took the Chair, Sir Eric, we were "Up the Junction". Now we are to travel down the course, and it is a course in which
a good deal of training will be required by the benches opposite. Mark Twain said that
It were not best that we should all think alike,
It is difference of opinion that makes horse races.
There is no doubt that difference of opinion makes horse races, and I am sorry that the Chancellor of the Exchequer has achieved a unique double today on Gold Cup Day. He not only succeeded in breaking with the tradition of the House of Commons and had controversial business upon Derby Day, but he has also broken with the tradition on Gold Cup Day. Some of us on this side of the Committee would be financially better off elsewhere.
I recognise that the Chancellor may not appreciate the niceties of racing. "Drawback" means only one thing to the average punter. It is a very different type of drawback from that which was discussed yesterday. The drawback which we have to discuss today is the Government's proposals in the Bill, with which I shall deal in the Amendment. Amendment No. 80 deals with on-course, as opposed to off-course, betting, and seeks to exclude on-course betting from the proposals in the Clause. The advantage

of the debate is that one is able to come to grips with the proposals which have been put forward generally.
The Chancellor of the Exchequer will find himself in a difficulty if he wishes to continue with his present proposals for a turnover tax. A turnover tax is normally upon commodities, and there one has something which can be seen, checked, and seized by the Revenue officers. Therefore, the normal advantage of a tax on turnover is that it relates to a type of commodity with which one is familiar and can, therefore, tax.
The difficulty of a tax on turnover in betting is exactly the reverse. The bet is usually not seen and it need not even be heard. It can be flashed by tic-tac. It may never be capable of being checked and certainly it can never be seized. Thus there is a very real inherent difficulty about the tax. I have no doubt that the on-course duty in its present form will break down. I shall develop the reasons why in a moment.
The second alternative, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) suggested, is a tax upon returns or upon winnings. Again, this cannot be checked and cannot be seen, but if proper records are kept it is at least more easy of collection, because it is not payable until the horse has won. Administratively, it is about three times as easy as the other class of tax.
As my right hon. Friend the Member for Enfield, West rightly said, there are three alternatives. The third is a tax which has been described as being in some ways on the physical assets. It is a tax upon the premises or upon the pitch. I have no doubt that this third form is the most attractive and effective.
Let us see where we are on common ground. We do not enter the debate in any party political spirit. I certainly do not, and I am sure that my hon. Friends who put their names to this Amendment and to others also take the same view. The people are more deeply affected by this afternoon's debate upon their betting than probably by any other debate which we shall have during the whole of consideration of the Finance Bill.
This debate interests the millions of people who are the small punters and who enjoy a little flutter and whose pleasure it is. If the Amendment, or something similar, is not carried, I am sure that I


can establish to the satisfaction of anybody who applies a logical mind to it that this duty will break down and will cause considerable discomfiture not only to the trade, but to the punter, and will not achieve the desired purpose.
I think that the Committee as a whole accepts, first, the need for an effective tax, and by "effective" I mean a reasonable and enforceable tax. Secondly, we accept the Chancellor's statement that it should be effective, fair and reasonable. That is a perfectly valid test. Thirdly, we say that he is quite wrong in saying that the proposed scheme is the best way of getting a reasonable yield.
The Chancellor has so far been wise in one respect. He has kept completely silent about anything relating to betting and gaining so far. There was one paragraph in his Budget speech. Shortly after that, I made a speech dealing with criticisms of the proposals. On the Second Reading of the Finance Bill, the right hon. Gentleman did not deal with that, but he was gently, and pleasantly, chided by my right hon. Friend the Member for Enfield, West, who pointed out that he would be prepared to bet that he would show considerably more expertise. Not even that has so far drawn the Chancellor or his able lieutenants into battle. I think that they are wise. I am sorry, in one sense, that the right hon. Member for Dudley (Mr. Wigg) is enjoying himself at Ascot today. He is one of the few who might have been able to give the Treasury Bench some useful advice. However, we shall have to apply our minds to the problem as best we can.
As between these alternatives, I do not see any other test than this: what will give the best yield and be the most effective and fair tax. Let us see the effect of what the Chancellor said about the first, the turnover tax. He said that the Government wanted to achieve a method which was the least likely to lead to evasion, was the most easy of enforcement, and was the most simple to collect. I think that one must agree that that is right. Those are good tests.
When the Royal Commission considered this in 1949–51 it indicated that the turnover tax yield would be below the estimate, that the administrative costs would be far higher than it had thought, and that it would lead to illegal betting. So it

will undoubtedly be. The first thing that will happen if this proposal for taxing on-course betting goes through is that it will lead to amateur bookmakers who will set up in opposition to the present licensed bookmakers.
This will be grossly unfair to the trade and to the punters, because the amateur bookmaker will operate on the basis that neither he nor the punter pays the duty. The duty is 2½ per cent. upon the stakes, which is roughly said to be about one-third of what the punter spends with the bookmaker. The public have not at present realised that anyone having a £1 each-way bet at 4 to I, whether he wins or loses, nevertheless pays 2½ per cent. upon £2-that is, Is. That has to be collected.
I shall give only one example, as my hon. Friend the Member for Richmond, Yorks (Mr. Kitson) will follow me and he has great knowledge of these matters. He will illustrate the ludicrous situation that will arise in relation to collection. I am informed—I believe this to be accurate—that on a bet of £1 the actual wager will be 19s. 6d.—that is to say, winnings will be paid out to 19s. 6d. Sixpence will represent the duty. I ask hon. Members to imagine the complexity and the cost of trying to work out the result of a 19s. 6d. double at odds of 11 to 4 and 13 to 8. I am sure that we shall have the answer to that one from the Official Box by the time the Chancellor of the Exchequer rises to address the Committee. If that is translated into a treble, or into an accumulator, or into a yankee, where there are 11 different bets at different amounts, it becomes an impossibility.
4.30 p.m.
I ask the Committee to visualise for one moment what will happen on the course. The duty is 6d. in the £. A man goes up to a course bookmaker and puts £1 on. He may have the misfortune to have an Irish colleague with him who has, perhaps, a short temper. He puts £1 on an 11 to 4 shot and comes back to find that he is not getting 11 to 4 to £1 but 11 to 4 to 19s. 6d. The reality of the situation must be recognised: bookmakers will give up, punters will give up and the duty just will not be collected. This is the reality of the situation as it will operate upon all courses. If the bookmaker carries the duty, and


in some way tries to give some yield to the Inland Revenue, it will be very unfair to the bookmaker and will not be a fair method. It will not meet the test of being enforceable which the Chancellor of the Exchequer laid down as one of his criteria. Therefore, the turnover duty will not work on course. It will not work at all.
I turn now to a very useful precedent we can look to and which has worked effectively. For many years past, working perfectly effectively on greyhound tracks there have been, not only the Totalisator, but bookmakers. Bookmakers in this case are paying upon the physical asset; that is, they are paying a direct tax on the pitch. They are charged so much to be able to go on the pitch. I do not propose to go into the details of this, although the matter is raised in a later Amendment which I have tabled but which has not been selected. That Amendment would involve a change in the amount of money paid and would, therefore, conflict with an earlier Financial Resolution.
I realise that this Amendment may well involve the Chancellor in considering how he is to obtain alternative taxation. If
he accepted the Amendment and exempted course bookmakers from the turnover duty, and if he then wished to achieve a fair yield on course betting, he could apply what I describe as a pitch tax. He will find the form which will enable him to do that contained in a later Amendment, save that that Amendment needs amending itself because, if it stood as it is, it would introduce a duty of 5 per cent.
It is not easy to assimilate these complicated details, even if one has had the advantage of meeting the trade and others on this matter. Nowadays, the course is purely the shop window of betting. In the main, bookmakers make little or no profit on the course. They make their profit off the course. They make it from the betting offices. They make it from the S.P. offices. I will not give the names, but two very well-known bookmakers have told me that on the course the profit which they make altogether is a mere 1 per cent. Off the course it is about ten times as much.
On the course there are the experienced racegoers. They are the people who are

able to take the money. There are the changes in the odds. Bookmakers are attracting money which comes from the stables. They attract money which comes from the owners, who have knowledge. They have to provide very much bigger staffs. A punter can enter a betting office free. Anyone going on to a racecourse must spend at least 30s. to get on the racecourse and then he has that much less money to spend upon betting on the racecourse. This is yet another reason why it is so much better to have a differential of advantage and tax on the course in a lower way than off the course.
The only effective system for on the course is, as is provided in this Amendment, by exempting on-course from duty and then, if it is desired to get a yield, one looks round for a tax on the pitch.

Mr. John M. Temple: Would my hon. Friend care to comment on the importance of betting on the course in providing the whole mechanism upon which starting prices are based? In other words, is not the course market basic to the whole betting industry?

Mr. Rees-Davies: My hon. Friend is absolutely right. In a moment I shall deal briefly with some aspects of how the betting mechanism on-course operates to provide the odds. I shall also show why, in certain ways, the proposed tax would be quite impossible of collection.
Just as it is easy to tax on the course betting by a pitch tax, the same principle can be applied to off the course. A betting office licence and a licence upon the physical assets of the telephones would provide a method of collection which would be absolutely simple and which would cost little administratively. It could be £30 a week on every betting office, payable in the same way as the Road Fund licence is paid. Then it could be so much on every telephone installed in an S.P. office.
The whole lot would be collected in advance. The bookmaker would pass the tax on to the punter in the shading of the odds. I know that these matters have received careful consideration in the Treasury. I have never understood why the Treasury has recommended a turnover tax, if this be the case. It may be that a tax on winnings is much to be commended, but a tax on turnover must inevitably break down, as it did in 1926, and end up in evasion and crime.
There is a very real feeling that this is what the Government are seeking. I ask the Chancellor to recognise that there is a feeling in the country that the Government want to see the tax break down so that they can abolish bookmakers altogether and have a State "tote". This feeling is widely held, because people think that the present tax is so chaotic and stupid as proposed that nobody can intend it seriously to do anything other than break down.
I want now to refer in more detail to the matter raised by my hon. Friend the Member for City of Chester (Mr. Temple). I have suggested the method of taxing the pitch and the communications to deal with off-course betting. I believe that that would be a successful method.
On the course there is at the moment the blower. This is a telephone apparatus which operates to send to the course commissions coming from substantial sums of money all over the country. This money is blown through the telephone on to the course and picked up in a series of bets. No arrangements have so far been made to cover the fact that bookmakers themselves engage, as between one and another, not only in hedging, which will be dealt with by a later Amendment, but also in placing very substantial commissions on the course, all of which are done by tic-tac without any records at all. This is the most widespread business upon which, in part, the final S.P. is determined, because the volume of money passing changes the odds.
At the same time, bookmakers lay bets with each other in all parts of the course. Also at the same time, the public, both on the rails and in the ring, are doing the same. It would be an administrative feat, in fact it would be quite impossible, for any person to be able to calculate even to £1, and what the calculations would be like on 2s. 6d., 5s., Ws., £5 and all the rest to arrive at the tax are too ludicrous to imagine.
I ask the Chancellor to bear in mind that on top of that there are also objections to the winners of races, and betting is done on objections as well as on the photographs. This betting is all done in a matter of minutes between the time when the objection takes place and the outcome, and on the photograph, of course, it is done in an even shorter

time, a matter of 30 seconds to a minute, perhaps.
I leave to my hon. Friends the other aspects of the mathematics involved here. The point of the case is that no one will have the administrative capacity or the time to determine a turnover tax or even the tax on winnings in on the-course betting. Off the course, the problems are almost as great.

Mr. Robert Sheldon: The hon. Gentleman suggested a fixed charge on betting shops, and he said that this could be accounted for by the bookmaker by shading the odds. Would not shading of the odds be more easily accomplished if the charge were a variable one, and is not this the solution to the bookmakers' problems on the course?

Mr. Rees-Davies: Yes, it would be variable. If the hon. Gentleman means that it woud be a higher charge for a pitch in the main rings than it would be in the lesser rings, that is certainly so.

Mr. Sheldon: I am thinking of the tax on turnover as we have it here.

The Chairman: Order. On this Amendment we must not have a debate on the desirability of alternative forms of taxation.

Mr. Rees-Davies: I respectfully agree, Sir Eric, and that is why I took up that matter in a general way only.
As regard the turnover, I hope that I have shown that it is quite impracticable to continue with the proposal as it stands. For on-the-course betting an entirely different method must be found. We have a valuable precedent which has worked well over the years at the dog tracks, and I fail to see why it could not be adopted here. If that system were adopted on the course, it would then be equally easy——

The Chairman: Order. We cannot, on this Amendment, debate the merits of alternative forms of taxation. We can debate only the Amendment which is before the Committee.

Mr. Rees-Davies: My point, Sir Eric, is that, before the Chancellor can consider any alternative form which may be attractive to him, it is a condition precedent that he must accept these Amendments because it is not until he has


exempted on-the-course betting from the tax as now drawn that he can consider an alternative. I have done no more than pave the way for his consideration of alternatives. These two Amendments are totally separate from anything else. I am concerned at present only to ensure that on-the-course betting is taken out altogether.
If he does that, the Chancellor will find that he will have in his hands a method by which he will avoid all the problems of evasion. He will have something simple. He will not have any of the paraphernalia and difficulties which are so unattractive to the public. Quite definitely, the public will find his present proposal most unattractive, and it will lead to considerable trouble and rows.
I conclude with a quotation from Dr. Johnson. This is
A hateful tax levied upon commodities and adjudged by wretches hired by those to whom Excise is paid ".
I hope that we may be able, in the corporate wisdom of the Committee, to make this and other improvements in the betting tax before it goes elsewhere.

4.45 p.m.

Mr. Timothy Kitson: I support my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), who so ably moved the Amendment. Many of us on this side genuinely believe that it will be impossible to operate this tax. My hon. Friend has already discussed the position of a man having a £1 bet on the course. But if a man has a £1 bet and pays his 6d. tax at the time be places it, he has to have his odds laid to £1 and something like seven-sixteenths or eleven-sixteenths of Id. This, of course, is quite impossible. If
a punter has his bet to 10s. and gives the 10s. to the bookmaker, his bet is to 9s. 9d. If it is 5s., his bet is to 4s. 10–1-d. If he has 2s. 6d. on a horse, the bookmaker must give him odds to 2s. 44d. No bookmaker could go to a racecourse without taking a computer with him to work out these odds.
Let us take the example of a man going to Ascot for the first day this week and having 5s. on the six winners. In other words, if he took his jackpot starting price with a bookmaker, he would win £73,548 14s. 10d. I do not

suppose that anyone was successful in doing that, but such a punter would be liable to lid. on his bet. The bookmaker's bogey horse on his book would obviously be the one which won the last race on this occasion, which started at 100 to 9. Supposing that he had other substantial bets on this animal—which happened to be "Track Spare"—he would have to have something in the region of £7,000 on the horse to save himself.
On that £7,000 he would have to pay £175 in tax. So he would be in the happy position, if the horse won, of having covered himself but having to pay £175 in tax. If the horse lost he would win 5s. from his punter, on which lid. would have to be paid, and he would also have to pay £175 himself in tax on the bet which he had laid.
This is a most extraordinary situation, and I cannot imagine that the Department has given very much thought to what it was trying to achieve. My hon. Friend was, I understand, out of order in suggesting another type of tax, but he did remind the Committee of what is done in greyhound racing. It makes sense and it is possible to collect.
The Racecourse Association is extremely worried about the situation. According to paragraph 1(2) of Schedule 2, it seems that it will be the Association's responsibility to see that the tax is collected. How is it to do it? It has not got the money or the staff to do it, although, obviously, the Association would be quite happy to see that any bookmaker infringing the betting laws was kept off the racecourse. I do not see how the racecourses themselves can be made responsible for collecting the tax, and I hope very much that we shall have this matter clarified when the Minister replies.

Sir Gerald Nabarro: I am a child in the matter of betting, and I bet very infrequently on racecourses. My knowledge does not compare with that of my hon. Friend. But I do not understand his argument. If I go to a point-to-point meeting and put £1 on a horse with a local bookmaker the Chancellor's proposal, as I understand it, is that that £1 should be taxed at 2½ per cent., and I therefore pay the bookmaker 20s. 6d. My bet is


not affected. [HON. MEMBERS: "No."] Is that wrong? If it is, what is the proposition? I do not understand what my hon. Friend is saying.

Mr. Kitson: I think that my hon. Friend would be like the irate Irishman, because, when he went to collect his money, as my hon. Friend the Member for the Isle of Thanet explained, he would find that he had his winnings returned on the basis of 19s. 6d. This is what we are arguing about.

Sir G. Nabarro: I am sorry to interrupt again. I do not wish to disturb my hon. Friend's speech, but I find this very difficult. My bet of £1 would not be disturbed. The 2½ per cent. to the Chancellor would be reserved; I pay that as an addition to the £1. I pay the bookmaker 20s. 6d. If the odds are 5 to 1, I win £5 [Hon. Members: "Wrong" 1 If that is wrong, what is the alternative?

Mr. Kitson: This is one of the points which we are arguing from this side. If my hon. Friend gives
the bookmaker 20s. 6d., the bookmaker must lay the odds to 20s. 6d. This is the point. It means that he is involved in laying the odds to 20s. 6d. and something like eleven-sixteenths of a ld. I think that that is the figure which the bookmakers' association gives.

Sir G. Nabarro: It seems that we are both wrong.

Mr. Kitson: I am sure that what I am saying is correct. It is certainly how people in the bookmakers' business understand it at the moment. Is my hon. Friend suggesting that everyone going along to make a 10s. bet will have a 3d. piece in his pocket to slip to the bookmaker at the same time? In fact, he will hand over £1 and want 9s. 9d. back.
This is one of the points which my hon. Friend the Member for the Isle of Thanet raised. On racecourses at the moment, the tendency all the time is for the bookmaker to start his betting nearer the time of the race than he did 10 years ago, and this means that he must deal with all his business within the last five or 10 minutes, which complicates the performance even more. He will not have time to give all the change and deal with things like that.
Any bookmaker who honestly started off, whether in a betting shop or on a racecourse, genuinely to try to operate this tax would, before the first race had finished, throw up his arms and say, "Good heavens, I cannot possibly do it". Bookmakers do not see how they can work it, and I am sure that, even with all the will in the world, it would be impossible to try to collect the threepences, three-ha'pences and three-farthings during the time of the race.
I am sorry that the Minister responsible for sport is not here today because he might have helped us. He takes a considerable interest in racing, and the whole racing business is extremely worried about the situation. I hope that the Chancellor of the Exchequer has been to see what happens on a racecourse. The horses go down to the start, they are under starter's order, and then one of them gets kicked. All the punters, supposing that it is the favourite or the second favourite, then try to lay their money off because the horse is going out although it has come under starter's orders, and they run to the bookmakers. In that short space of time, how can all the threepences, three-ha'pences and three-farthings be cleared off? It will not be workable.
The Tote Levy Board has made tremendous efforts in the last few years to try to make things more comfortable for the racing public. A great deal has been achieved. Many of us on this side believe that, if the betting tax is introduced as it now stands, many of the people attending racecourses—after a struggle, attendances are starting to improve again—will be driven away. This, of course, will tend to put things back where we were before, with the illegal bookmaker back in business.
This is a genuine worry which I hope the Chancellor will bear in mind, because if the Levy Board loses money by not getting the levy to which it is entitled, because of the tax and the great difficulties the bookmakers have in collecting it, and if racecourse attendances also fall, the position for the industry will be extremely serious. I hope that the Financial Secretary will try to solve some of these problems when he replies.

5.0 p.m.

The Financial Secretary to the Treasury (Mr. Nial MacDermot): On these


Amendments, what we are discussing is whether on-course bookmaking should be exempted from the general betting duty. I appreciate that the hon. Member for the Isle of Thanet (Mr. Rees-Davies), who moved the Amendment, also put down others to suggest a way in which in lieu of that could be substituted a different form of taxing on-course betting and I do not want to take any false points and suggest that the hon. Gentleman wants to exempt on-course betting completely. However, for the purposes of discussion it might be helpful if I suggest why we believe that on-course betting should be dealt with in the same way as off-course betting and why we believe that this is possible and why other ways would not be satisfactory.
The hon. Gentleman's argument has
been consistently put to us by the bookmakers. We have had various representations from the bookmakers, not all speaking with one voice and some bookmakers not always making the same representations. They have changed their minds, as other people have changed theirs on this subject from time to time. But the one thing
which the on-course bookmakers have all alleged throughout is that it would not be practicable for them to recover a general betting duty on on-course betting. We have remained unconvinced by their arguments and something the hon. Member for the Isle of Thanet himself said fortified our reason for not accepting the bookmakers' argument.
The crux of the matter is the way in which the bookmaker himself recovers the duty. Everyone agrees that a duty of this
order cannot be paid by the bookmakers out of their existing gross returns and that they therefore have to pass it on in some way to the punters, or some of the punters. There is a great variety of ways in which the duty might be passed on.
Various bookmakers have suggested to us that we should prescribe a particular way, some suggest one way and some suggest another, in which the bookmaker should pass it on. We do not think that that is a right thing for us to do. It would not be in accordance with precedent where other forms of duty, for example, Purchase Tax, are passed on to the ultimate consumer. We do not prescribe the way in which the person liable to Purchase

Tax shall pass it on. It is left to him to decide and there are many very good reasons why we do not think that it is right to lay down the way.
The hon. Member for Worcestershire, South (Sir G. Nabarro) asked what would be the position when he made a £1 bet. If he makes a £1 bet, there are a variety of ways in which the bookmaker can seek to recover the duty. He will be liable to pay to the Revenue 6d. on that £ bet and the question is how he passes that on to the hon. Member himself or to some other punter, and it may be some other punter because the bookmaker need not collect it from the hon. Gentleman.
One way is by an addition to the stake, the assumption which the hon. Member himself made, namely, that the bookmaker would say that he wanted 20s. 6d., 20s. for the stake and 6d. for the Excise. If the hon. Gentleman agreed, that would be the form of the bet, and the stake would be £1, not a very likely thing for the bookmaker to do, because he would then be highly unpopular with the hon. Member for Worcestershire, South.

Sir G. Nabarro: This is a very valid point. We have been debating gambling duties for many years. In 1963 I was debating them with the Conservative Chancellor of the Exchequer. This is the method which I personally and many other people favour and which I call the Entertainments Duty method. It was the way in which the duty was added to the cost of a cinema seat when there was Entertainments Duty on a cinema seat. Printed on the ticket was the cost of the seat plus the duty. The bookmaker could operate that system validly and easily.

Mr. MacDermot: I forgot that the hon. Gentleman was not a regular punter and I wrongly attributed to him the reaction which most punters would have. They would not favour that method which is why bookmakers would be unlikely to adopt that system, although it is a possible system.
Secondly, there is the system suggested by the hon. Member for the Isle of Thanet and the hon. Member for Richmond, Yorks (Mr. Kitson), namely, deduction from the stake. The bookmaker would say that he had to pay 6d. to the Revenue and that he treated


the stake as being only 19s. 6d., so that he would pay out on 19s. 6d. This would impose an additional burden on those human computers who stand beside the bookmakers. I see from the newspapers recently that they beat a number of computers in a test. Very remarkable men they are. But again, this method would not satisfy at any rate the irate Irishman mentioned by the hon. Member for the Isle of Thanet and, again, that is not a very likely method for the bookmakers to adopt, although it is possible.
The third method is by deduction from 'winnings or returns, that is to say, winnings plus the stakes. This is the
way which some bookmakers have urged upon us and which they have said we should make obligatory in law. There were Amendments about this proposal which, unfortunately, are out of order, but perhaps I can briefly discuss their merits when we debate the Clause as a whole. Suffice it to say at the moment that we Jo not welcome any proposal that we should impose this or any other system on the bookmaker.
A fourth method would be in effect to reduce the odds, adjusting the odds or, as the hon. Member for Richmond, Yorks called it, shading the odds. This is the way which, if I may make a forecast—which is always a rash thing to do—it is most likely that the book makers will adopt.
A fifth method has recently been discussed in the sporting Press and it applies not so much to on-course betting as to off-course betting. It is that the bookmakers might decide themselves to alter the terms of their place betting. For example, instead of being ready to pay on four places with a given number of runners, they would be prepared to pay on four places with a larger number of runners. Other methods have been discussed elsewhere by which bookmakers would be able to recover sufficient to pay the duty without interfering with their normal odds for win bets.

Mr. Kitson: The hon. and learned Gentleman suggests that the bookmaker might shade the odds, and I accept that that is a possibility. But if we come to the man who has backed five winners on the first day at Ascot, at the sixth race the bookmaker is left with a 5s. bet to pay £175 tax, and if the punter has got

himself out to the last race the one thing he does not want at that stage is a shading of the odds. He would much rather see the horse at 20 to 1 instead of at evens. The bookmaker would be in difficulty if he suggested shading the odds, but he would have that tax to pay.

Mr. MacDermot: That is a case which we can discuss better when we reach the Amendment dealing with laid-off bets. This is a particular problem which arises from the system of taxing laid-off bets.
We have always suggested to the bookmakers that the likely way in which they would recover this duty would be by reducing the odds. For some reason they have asserted that that is impossible, but we have never understood their argument. The experience of greyhound betting supports us. When the bookmakers first incurred the liability to pay the licence duty, they had to pass it on. Some of them did so in the form of a deduction from winnings. That proved unpopular with the punters, particularly as other bookmakers did it not in that form, but by shading the odds.
In many cases the effect on the punter was exactly the same. The net amount which the punter would receive, whether the bookmaker had shaded the odds or tendered the same odds, but then made a reduction from the return, would be the same. However, some punters are naïve and think that they are doing better when the odds have been adjusted and they do not have their attention drawn to the deduction which has been made in order to pay the tax.

Mr. Eric Lubbock: Have the bookmakers claimed that it is difficult to calculate by how much the odds should be adjusted to take the tax into account?

Mr. MacDermot: No. I have not discussed that with bookmakers. This is a highly expert calculation which they are well able to make. They have to adjust their odds at the moment in order to produce the figure—most of them make it a 7 per cent. addition—to cover their administrative expenses and to provide their profit margin and, of course, their expenses change from time to time and, presumably, they have to make adjustments to cover those changes. This is


something within the experience and great skill of bookmakers.
The next argument why one should not exempt on-course betting was alluded to by the hon. Member for the City of Chester (Mr. Temple) and is the interrelation of on-course betting and off-course S.P. betting. If, as I suggest, what would happen would be that on-course betting would be adjusted to take account of the duty, the odds which will then govern the off-course S.P. betting will be odds which will already ensure for the off-course bookmakers that the return should be sufficient to provide them with money with which to pay the duty. In other words, they will not themselves be in the position of having to adopt one of the other courses which is less favourable to the punter. This would be an advantage from the bookmakers' point of view.
It has sometimes been argued—it has not been said today—that on-course betting should be exempt so as to encourage greater attendance at race meetings. We do not think that that is a consideration which should affect us in framing what is intended to be a general betting duty. The Totalisator Board would not welcome the suggestion for the exemption of on-course betting. The reason is that a great deal of off-course betting is fed into the Totalisator pool. If that off-course betting is to be subject to duty, the Board has to allow for the duty in the odds declared on the tote, and its odds of necessity would be reduced by the off-course duty. If the
on-course bookmakers were in a more favourable position and were able to offer odds which ignored the duty, that would give them an unfair advantage over the totalisator on the course. The alternative for the totalisator would be to have two pools, one for off-course and one for on-course betting, something which it would not welcome.
The main argument against this form of duty on on-course betting—and we are discussing only on-course betting—is that it is alleged that there would be no satisfactory practical method of administrative control. Some bookmakers have greatly feared that we would require them to keep documents of a kind which it would clearly be impracticable for

them to keep in all the haste of on-course betting. At this stage I do not want to go into detail about the administrative system with which we shall deal when we consider Schedule 2, but briefly the existing field book will be the basis of the system of checks. Nearly all bookmakers have a system of serially numbered betting tickets and those who do not will be required to keep serially numbered betting tickets. The serial number will be clearly recorded in the field book and we consider that that will provide an adequate basis for the system of checks and controls which we shall operate.
All that the bookmaker will be required to do will be to obtain daily sheets from the racecourse authorities and this is all that the racecourse authorities will be involved in from the point of view of collection on-course. They will pay a sum for those betting sheets, which will be, in effect, an advance payment of duty. The exact amount will be adjusted later when the returns have been examined. This return would be a quite simple, one-page document. Bookmakers will not be required to return particulars of each bet but merely totals of the amounts that they have received by way of stakes for the bets.

Mr. Kitson: Will these sheets all be the same price?

Mr. MacDermot: No, I do not think that they will all be the same price, because, clearly, some bookmakers will be betting on a much larger scale than others and there will be a variation in prices.

Mr. Rees-Davies: If one is setting up that position, then surely it is but a small variation to decide to fix what I call the pitch tax. It is really all part of the same thing.

Mr. MacDermot: I never know whether to give way to hon. Gentlemen. It is courteous to do so, but I find that they only raise a point to which I am coming.
The alternative suggested by the hon. Gentleman, the pitch tax, supports my argument, that if it is possible to recover the duty on a pitch tax it is equally possible for it to be recovered on a percentage tax on stakes. The difficulties with regard to the pitch tax are these.

The Chairman: I do not think that we can go into the pitch tax, because I


stopped the hon. Gentleman the Member far the Isle of Thanet (Mr. Rees-Davies) from debating the merits of it, and if the Financial Secretary now intends to develop the demerits of it, it is bound to provoke an irregular debate on this Amendment.

Mr. MacDermot: Perhaps we will have an opportunity later, when I can advance the arguments and difficulties.

Mr. Rees-Davies: On a point of order. I am not asking to bring this into debate. What is said on the basic argument is that we should exempt on-course bookmakers because other ways can then be considered. I would have respectfully said that, provided the hon. Gentleman dealt with it in that way, upon what I would call the general principle, and not n any other way. Then it flows from he general nature of the background to his debate.

The Chairman: The fact is that in moving his Amendment the hon. Member is entitled to argue that this particular tax upon on-course betting has demerits and that the Chancellor could collect revenue in another way, but he is not in order in debating in any detail the merits or demerits of some alternative form of taxation.

Mr. MacDermot: All that I need say at this stage is that the greyhound track system is sufficiently uniform for a kind of fiat-rate tax, or a tax with a slight variation for different enclosures. It can work more or less fairly because there is sufficient uniformity. There is such great variation in horse-racing tracks that we do not think that anything like a fair system could be devised. In any event, we think that this tax will work, and will be a fair and accurate tax and achieve what the whole of this tax is intended to do, which is to provide a general betting duty at a low level on all monies staked generally by way of betting.
If there were to be complete exemption for on-course betting the opportunities for evasion would be very great indeed. Many of the on-course bookmakers have close connections with off-course bookmakers and it obviously would not be difficult to evade the duty for off-course bookmaking, by including off-course bets in the on-course returns. This would be

an extremely difficult matter for the Commissioners to supervise or control. I may say on this point that the different rates which there were for on-course and off-course betting in the 1926 duty was one of the reasons for the failure of that duty.
I would repudiate any suggestion that it is our intention to produce an unworkable system, or to make life difficult for the bookmakers, or to provide any justification or excuse for altering the law relating to bookmakers. We are with them and join with them in seeking to ensure that the scheme is not one which will drive the bookmaker underground. I quite accept the genuineness of the concern and fears which bookmakers have expressed on this subject.
They have found the great advantages which derive from the legality of bookmaking today compared with the position as it was a few years ago. We know that the great majority of them do not want to return to that, nor do we want to make them do this. We have been in close consultation with the Home Office throughout in devising our proposals and it is satisfied that the system we have devised is the one least likely to produce any return to the old and undesirable methods.

5.15 p.m.

Mr. Iain Macleod: I am very glad to hear the last remark of the Financial Secretary. It is helpful to know that, even though we think that they are going about this the wrong way, at least there is nothing more than folly behind the Government's proposals. At one point the Financial Secretary said that the bookmakers supported this method. That may be so. I would like to make it clear that the method which I advocate is not supported by the bookmakers. I prefer quite a different method and approach. Therefore, my solutions sometimes coincide with those of the bookmakers, but they do differ. My suggestions have emerged from my own studies of the matter.
There are three reasons why I think that these Amendments are important. First, they affect many millions of people. Secondly, we are dealing with a new tax, and, thirdly, the House of Commons went wrong on this matter 40 years ago,


and, consequently, it is worth while seeing, if we can, that we do not go wrong again. It is worth noting that, although there are many differences between today and 40 years ago, particularly as a result of the establishment of legalised betting, the Government's method is the one which failed 40 years ago.
I take as my starting point for my brief comments to the Financial Secretary the starting price, which is how my hon. Friend the Member for the City of Chester (Mr. Temple) referred to this matter. It is the course bookmakers who make the price and, therefore, make the market for on-course and off-course transactions. It is proposed that all transactions that lead to the final price should at each stage attract tax. I do not want to go into this, because there is a later Amendment in which we will be able to return to this point.
I just want to note here that a very large number of these transactions are simply the spreading of the weight of liability among different bookmakers on the course, and the spreading of this liability as thinly as possible so that the risk to themselves is something which they feel that they can bear. In the exchanges which my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) had with the Financial Secretary, I agreed with what the Financial Secretary said. The difficulty is that the answer is that we do not know. I do not think that my hon. Friend is right or wrong. We have not yet been told how this is to be collected and we will not know until the Regulations come before the House. Equally we do not know, although many methods were indicated, which method will finally be adopted. As I understand the Government's present intentions, they are not going to lay down the method by which the bookmakers will be able to recover.
This Amendment is on a fairly narrow point, which is whether we should exempt from tax the transactions which lead up to the declaration of starting prices. As anyone who knows anything about racing will realise, the work on the course from the bookmaker's point of view is concentrated into a fierce scramble in the last five or six minutes before the race. I do not think that it

is a very feasible way of approaching the matter to believe that a bookmaker will say to a Yorkshireman who wants to put 5s. on at an evening meeting at Pontefract, "Can I have l½d. for the Chancellor of the Exchequer?" These things can be settled after the race, because there is a period of 20 minutes or so of calm after one scramble before the next scramble starts.
If we were to deal with the matter on
the returns, that is an infinitely easy thing to check. If the horse won at 10 to 1, there would be roughly eleven or twelve times as many slips to check and count under the Government system as there would be under the system which we have proposed in the Amendment which, for reasons which I understand, cannot be called.
The Commissioners of Customs and Excise are excellent people and have studied this matter very carefully. But they have had two bees buzzing in their bonnets for many years. One of them relates directly to this Amendment. It is the illusion, which is shared, I am sad to say, by hon. Members on both sides, that it is possible on the course to shade the odds against the punter. I can understand the argument in relation to the betting shop, but we are not discussing that; we are discussing what happens on the course. For two reasons which I will give briefly, it simply is not practicable, if one understands starting price bookmaking, for this to be done.
The first reason is that it is not the bookmakers who make the return of starting prices which is at once flashed through the Press Association all over the country. This is done by two reporters, one from the Sporting Life and the other from the Sporting Chronicle. It is a matter of faith and integrity accepted all over the world that their answer is right at the moment of the "off". It is also accepted that the bookmaker should have nothing to do with it. It is clear from some of the returns that no bookmaker would dream of having such odds because of the headaches that they would bring.
It is common to see odds of 21 to 20 returned. Another odd fraction is 85 to 40. A "bookie" who had it within his power to announce the starting price would never dream of returning 85 to


40 if he had to make a series of
calculations involving 2s. 6d. any-to-come bets from all over the country, which, of course, he has to do. Bets would be struck at 85 to 40 in the ring or those would he the odds on offer on the rails at the moment of the "off". This specialised service of the Sporting Life and Sporting Chronicle is not one which the "bookies" can influence at their own convenience.
Secondly, the competition in the last few minutes before the "off" is very fierce indeed, for obvious reasons. It is essential for a "bookie", particularly one who makes his living on the course as opposed to off the course, to get various well backed horses into his book. For example, if a favourite or near favourite is being quoted at 2 to 1 and 2 to 1 is its price in the ring and on the rail, and if a certain "bookie" does not have that horse in his book so that he has a lopsided book, far from shading the odds he has to increase them. He has to go from 2 to 1 to 9 to 4 or even to 5 to 2 to attract money on that horse for his book.
It is for these two reasons, I assure you, Sir Eric—[Laughter.] I claim to have the same relationship to this subject as my hon. Friend the Member for Worcestershire, South has to packaging plywood. The Financial Secretary knows these arguments. He will have had them put to him, or I hope that he has studied them because they are pertinent arguments.
Lord Harding started on the Levy Board with exactly the same fallacy—that it was possible to shade the odds in this way and attract the levy money. I understand that he abandoned that view—I have not discussed the matter with him, so I may be wrong—in the face of the arguments and took up for the levy something much nearer to what I might call the physical asset approach, which is the one I have constantly recommended.
Another fallacy which comes only very mildly into the debate, and, therefore, mention it in passing, is the Irish fallacy, which is that because something works in Ireland it will work here. We should know better than that. In Ireland, there are two taxes off the course and one levy on the course, but on the course

the Government tax does not apply to on-course betting. In its place there is a system by which the racing board collects. I heard with some gloom the Financial Secretary's proposal about how this money would be collected from bookmakers on the course, because he is following exactly the Irish system, and this is by no means the right approach.

Mr. Kitson: Would not my right hon. Friend agree that if the bookmakers were shading their odds they would be creating a larger headache for themselves? Is it not a fact that just before a race begins most of the heavy betting, certainly on the rails and in Tattersalls, is between the bookmakers? If there is shading of the odds in the last few minutes before the race, the bookmaker who is trying to get himself out of a difficulty over a "Canadian", "Yankee", "Patent", or "Round Robin" will suffer. This is the sort of situation which would create difficulty for himself.

Mr. Macleod: Yes. A similar argument is that there is no inducement to a bookmaker to falsify the amount of his take because he has to pay Profits Tax and Corporation Tax on it.
This is a very important subject for the reasons which I have given. I want to see the Government get it right. Goodness knows why I should want them to do so. But if they are to do something like this, I prefer that they should do it in a sensible way. Throughout this Clause, they have, as we will show in a series of short but effective debates, picked the wrong course. As the Government are clearly set in their ways, and as those ways will bring unsuspected and unhappy consequences—I mean in a much wider sense than racing—I would advise my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) to divide the Committee.

5.30 p.m.

Sir G. Nabarro: I am absolutely in opposition to my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). If my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) forces a Division, I will vote with the Government. I am against my hon. Friend. We are old antagonists in this matter. It was my hon. Friend who intervened in a speech of mine three years ago to say that it was grossly impracticable to


apply a turnover tax to betting on the racecourse—[Interruption.] He still thinks that it is.
I will quote his intervention, because it is precisely on the point of the Amendment. I was speaking on the general desirability of a betting tax based on turnover during the Budget debate of 1963. My hon. Friend the Member for the Isle of Thanet intervened in my speech with these words:
"My hon. Friend is very entertaining on this matter, but does he realise that his conception of turnover is entirely erroneous in his whole conception of gambling? Is he seriously suggesting that a person who in the course of an afternoon on a racecourse has perhaps seven or eight bets of a couple of shillings should pay a substantial tax on each bet struck, for that is the turnover to which my hon. Friend refers—not what people win or lose in the outcome but the amount involved in every bet? Does he realise that he will be one of the most unpopular people in England if he supposes that we could bring in such an inequitable tax of that nature?"
I replied:
I am not concerned with personal popularity. I am concerned with fiscal ethics and fiscal equity. That is much more important to me than popularity on a racecourse. I shall still wager my modest few shillings at the Springhill point-to-point next Easter Monday."—[OFFICIAL REPORT, 9th April, 1963; Vol. 675, c. 1163–4.]
I did, and I lost.
I hope to come back to the point in the debate on the Clause, but later in the same debate there was a controversy between my right hon. Friend the Member for Barnet (Mr. Maudling), then Chancellor of the Exchequer, and myself as to the practicability or otherwise of applying a turnover tax to on-course betting. He said that it was not practicable. I said that it was. Again, without straying on to matters that ought to be dealt with on Clause stand part, the controversy ended there, my hon. Friend the Member for Southend, East (Sir S. McAdden) supporting me in 1963 as we supported each other in 1962, asking for the very form of taxation that the Government are now bringing forward, though not necessarily the same method. However, I shall pass to that in one moment.
I am against my hon. Friend the Member for the Isle of Thanet about on-course betting. If betting is to be taxed, on-course betting must be taxed with it. I am with the Financial Secretary in saying

that it should be left to the discretion of the bookmaker as to how he recovers the tax from his clients, the punters. I know that my hon. Friend will not agree with me, but I call in aid a representative body of a vast section of British opinion on gambling. I quote from idle Annual Report of the Churches Council on Gambling for the year ended 31st December, 1965.
Horse-racing men will immediately say that the Church is biased, puritanical and inaccurate, and that no notice should be taken of it. [Interruption.] Perhaps my hon. Friends do not, but I have heard horse racing men say so. I have no special brief for that body, any more than I have for "bookies" or those concerned with bloodstock, but I am interested to see what that Council says about shading the odds, because it refers to that matter in its report.
This is where I come into collision with my hon. Friend. It is perfectly true that, a few minutes before the off, the odds are flashed across the country by these experts— —

Sir Stephen McAdden: The odds are not flashed a few minutes before the off, but after the off.

Sir G. Nabarro: I am sorry. Perhaps it would be more accurate to say "a few seconds after the off". I quite concede that. But that represents only a small part of the generality of bookmaking and the placing of bets. We are talking, in the generality of betting, of a sum of £1,000 million a year in terms of turnover—[Interruption.] Did my right hon. Friend say "No"?

Mr. Iain Macleod: I said "Nowhere near", but please go on.

Sir G. Nabarro: No doubt at a later stage we may debate what is the extent of betting turnover, but I have the figures here from an authoritative body. If the Treasury has any more authoritative figures—for example, the figures on which it bases the yield of £50 million from the tax—perhaps we can have them. After all, as it is a turnover tax, the Treasury must have the turnover. The total yield is £50 million from this form of taxation.

Mr. Iain Macleod: The total yield is not £50 million, but £11 million. Secondly, as far as turnover is concerned, if my hon. Friend will read the Report


of the Royal Commission, which is a sightly more authoritative body than the Churches Council, he will see that it went into it with great care and found that the turnover is something like £150 million.

Sir G. Nabarro: My right hon. Friend is talking about horse racing alone. was talking about the generality of Letting, but I do not wish to get out of order by talking about the whole field of betting. Certainly, horse racing may Le £150 million.
Let me return to the question of shading the odds. The Report says:
It is said that a betting tax based on turnover could not be borne within the profit margin to which bookmakers work. But a tax on turnover would not have to be taken from existing profits. Course bookmakers make a book to show a profit whichever horse wins. They lay odds with this in mind, and vary them according to the actual betting. Regular punters may ask for slightly better odds than are being offered, but the bookmaker only accepts such bets at his discretion. He controls the odds. If necessary, to allow for the tax, he could reduce them all slightly and, for instance, instead of 100–8, lay 12–1. This would increase his profit "—
a s well as providing for the tax.

"Even a slight reduction in the odds laid might increase the profits of bookmakers beyond the amount required to pay the tax. It is unlikely that a slight adjustment of odds would deter people from betting any more than a tax deters them from engaging in other activities."

I say that if shading the odds is a practicable means of recovering the tax from the punter, I do not mind. I can go to one "bookie" at a point-to-point and get 7 to 4, and I can go to the "bookie" next door and get 6 to 4, or to the "bookie" next door to him and get 2 to 1. They are all different. They are all, in measure, shading the odds.

If there is that difference between contiguous "bookies", it follows that the small amount of 2íper cent. on-course is perfectly capable of being recovered by shading the odds. That is why I am diametrically opposed to what my right hon. Friend said. I think that this is a mistaken Amendment. If we are to have a betting duty, it must cover the whole field, and it must cover on-course betting as well as every other kind of betting.

Question put, That those words be there inserted:—

The Committee divided: Ayes 125, Noes 208.

Division No. 21.1
AYES
[5.39 p.m.


Alison, Michael (Barkston Ash)
Giles, Rear-Adm. Morgan
Macleod, Rt. Hn. Iain


Astor, John
Gilmour, Sir John (Fife, E.)
McMaster, Stanley


Awdry, Daniel
Glover, Sir Douglas
Maddan, Martin


Barber, Rt. Hn. Anthony
Goodhart, Philip
Marples, Rt. Hn. Ernest


Batsford, Brian
Goodhew, Victor
Maxwell-Hyslop, R. J.


Beamish, Col. Sir Tufton
Grant, Anthony
Maydon, Lt.-Cmdr. S. L. C.


Bennett, Sir Frederic (Torquay)
Grieve, Percy
Munro, Hector


Bennett, Dr. Reginald (Cos. & Fhm)
Griffiths, Eldon (Bury St. Edmunds)
More, Jasper


Biffen, John
Gurden, Harold
Morrison, Charles (Devizes)


Blaker, Peter
Hall, John (Wycombe)
Munro-Lucas-Tooth, Sir Hugh


Boyd-Carpenter, Rt. Hn. John
Hall-Davis, A. G. F.
Murton, Oscar


Braine Bernard
Harvey, Sir Arthur Vere
Neave, Airey


Brinton, Sir Tatton
Harvie Anderson, Miss
Noble, Rt. Hn. Michael


Bromley-Davenport, Lt. Col. Sir Walter
Hastings, Stephen
Nott, John


Bruce-Gardyne, J.
Hawkins, Paul
Osborn, John (Hallam)


Bullus, Sir Eric
Heald, Rt. Hn. Sir Lionel
Page, John (Harrow, W.)


Campbell, Gordon
Heath, Rt. Hn. Edward
Peyton, John


Carlisle, Mark
Heseltine, Michael
Pike, Miss Mervyn


Cary, Sir Robert
Higgins, Terence L.
Pink, R. Bonner


Channon, H. P. G.
Hiley, Joseph
Price, David (Eastleigh)


Chichester-Clark, R.
Hirst Geoffrey
Pym, Francis


Clark, Henry
Hogg, Fit. Hn. Quintin
Ramsden, Rt. Hn. James


Clegg, Walter
Holland, Philip
Pees-Davies, W. R.


Cooke, Robert
Hordern, Peter
Roots, William


Costain, A. P.
Howell, David (Guildford)
Rossi, Hugh (Hornsey)


Craddock, Sir Beresford (Spelthorne)
Hunt, John
Russell, Sir Ronald


Crosthwaite-Eyre, Sir Oliver
Iremonger, T. L.
St. John-Stevas, Norman


Crouch, David
Irvine, Bryant Godman (Rye)
Scott, Nicholas


Cunningham, Sir Knox
Jenkin, Patrick (Woodford)
Sharpies, Richard


Dalkeith, Earl of
Jennings, J. C. (Burton)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Dean, Paul (Somerset, N.)
Jopling, Michael
Sinclair, Sir George


Digby, Simon Wingfield
Joseph, Rt. Hn. Sir Keith
Smith, John


Eden, Sir John
King, Evelyn (Dorset, S.)
Stodart, Anthony


Elliot, Capt. Walter (Carshalton)
Legge-Bourke, Sir Harry
Stoddart-Scott, Col. Sir M. (Ripon)


Errington, Sir Eric
Lloyd, Ian (P'tsm'th, Langstone)
Tapsell, Peter


Fisher, Nigel
McAdden, Sir Stephen
Taylor, Frank (Moss Side)


Foster, Sir John
MacArthur, Ian
Temple, John M.


Galbraith, Hn. T. G.
Maclean, Sir Fitzroy
Thatcher, Mrs. Margaret




Tilney, John
Ward, Dame Irene
Younger, Hn. George


Turton, Rt. Hn. R. H.
Wells, John (Maidstone)



Vaughan-Morgan, Rt. Hn. Sir John
Wills, Sir Gerald (Bridgwater)
TELLERS FOR THE AYES:


Vickers, Dame Joan
Wilson, Geoffrey (Truro)
Mr. R. W. Elliott and Mr. Eyre


Walker, Peter (Worcester)
Worsley, Marcus





NOES


Abse, Leo
Griffiths, Will (Exchange)
Oakes, Gordon


Anderson, Donald
Grimond, Rt. Hn. J.
Ogden, Eric


Archer, Peter
Hale, Leslie (Oldham, W.)
O'Malley, Brian


Armstrong, Ernest
Hamilton, James (Bothwell)
Orbach, Maurice


Ashley, Jack
Hamilton, William (Fife, W.)
Oswald, Thomas


Atkins, Ronald (Preston, N.)
Hannan, William
Owen, Dr. David (Plymouth, S'tn)


Atkinson, Norman (Tottenham)
Harper, Joseph
Padley, Walter


Bagier, Gordon A. T.
Hart, Mrs. Judith
Paget, R. T.


Barnett, Joel
Hattersley, Roy
Pannell, Rt. Hn. Charles


Beaney, Alan
Henig, Stanley
Park, Trevor


Berm, Rt. Hn. Anthony Wedgwood
Herbison, Rt. Hn. Margaret
Pearson, Arthur (Pontypridd)


Bennett, James (C'gow, Bridgeton)
Hilton, W.S.
Peart, Rt. Hn. Fred


Bessell Peter
Hooley, Frank
Pentland, Norman


Blnns, John
Houghton, Rt. Hn. Douglas
Perry, Ernest G. (Battersea, S.)


Bishop, E. S.
Howarth, Harry (Wellingborough)
Perry, George H. (Nottingham, S.)


Blackburn, F.
Howie, W.
Price, Thomas (Westhoughton)


Boardman, H.
Hoy, James
Price, William (Rugby)


Booth, Albert
Hughes, Rt. Hn. Cledwyn (Anglesey)
Probert, Arthur


Bowden, Rt. Hn. Herbert
Hughes, Emrys (Ayrshire, S.)
Rankin, John


Boyden, James
Hughes, Hector (Aberdeen, N.)
Roberts, Albert (Normanton)


Braddock, Mrs. E. M.
Hughes, Roy (Newport)
Roberts, Gwilym (Bedfordshire, S.)


Bray, Dr. Jeremy
Jackson, Peter M. (High Peak)
Robinson,Rt.Hn.Kenneth(St.P'c'as)


Brooks, Edwin
Janner, Sir Barnett
Robinson, W. O. J. (Walth'stow, E.)


Broughton, Dr. A. D. D.
Jenkins, Hugh (Putney)
Rose, Paul


Brown, Hugh D. (G'gow, Provan)
Johnson, Carol (Lewisham, S.)
Ross, Rt. Hn. William


Brown,Bob(N'c'tle-upon-Tyne,V1.)
Johnston, Russell (Inverness)
Rowland, Christopher (Meriden)


Buchan, Norman
Jones, Rt.H.Sir Elwyn(W.Ham,S.)
Rowlands, E. (Cardiff, N.)


Buchanan, Richard (G'gow, Sp'burn)
Judd, Frank
Ryan, John


Butler, Herbert (Hackney, C.)
Kelley, Richard
Sheldon, Robert


Callaghan, Rt. Hn. James
Kenyon, Clifford
Shinwell, Rt. Hn. E.


Cant, R. B.
Kerr, Russell (Feltham)
Shore, Peter (Stepney)


Carmichael, Neil
Lawson, George
Silkin, John (Deptford)


Chapman, Donald
Lee, Rt. Hn. Frederick (Newton)
Silverman, Sydney (Nelson)


Coe, Denis
Lee, John (Reading)
Slater, Joseph


Coleman, Donald
Luard, Evan
Small, William


Concannon, J. D.
Lubbock, Eric
Snow, Julian


Conlan, Bernard
Lyon, Alexander W. (York)
Spriggs, Leslie


Cousins, Rt. Hn. Frank
Lyons, Edward (Bradford, E.)
Steel, David (Roxburgh)


Cronin, John
Mabon, Dr. J. Dickson
Steele, Thomas (Dunbartonshire, W.)


Cullen, Mrs. Alice
McCann, John
Stonehouse, John


Davidson, Arthur (Accrington)
MacColl, James
Strauss, Rt. Hn. G. R.


Davidson,James(Aberdeenshire,W.)
MacDermot, Niall
Swingler, Stephen


Davies, Dr. Ernest (Stretford)
Macdonald, A. H.
Symonds, J. B.


Davies, Harold (Leek)
McGuire, Michael
Taverns, Dick


Davies, Robert (Cambridge)
Mackenzie, Alasdair(Ross&amp;Crom'ty)
Thomas, Iorwerth (Rhondda, W.)


Dempsey, James
Mackenzie, Gregor (Rutherglen)
Thorpe, Jeremy


Dewar, Donald
Mackie, John
Tinn, James


Diamond, Rt. Hn. John
Mackintosh, John P.
Tuck, Raphael


Dickens, James
Maclennan, Robert
Urwin, T. W.


Doig, Peter
McMillan, Tom (Glasgow, C.)
Varley, Eric G.


Dunn, James A.
McNamara, J. Kevin
Wainwright, Edwin (Dearne Valley)


Dunnett, Jack
Macpherson, Malcolm
Walden, Brian (All Saints)


Dunwoody, Mrs. Gwyneth (Exeter)
Mahon, Peter (Preston, S.)
Walker, Harold (Doncaster)


Dunwoody, Dr. John (F'th & C'b'e)
Mahon, Simon (Bootle)
Watkins, David (Consett)


Ellis, John
Mallalieu, E. L. (Brigg)
Weitzman, David


Ensor, David
Manuel, Archie
Wellbeloved, James


Evans, Albert (Islington, S.W.)
Mapp, Charles
Whitaker, Ben


Finch, Harold
Marquand, David
White, Mrs. Eirene


Fletcher, Raymond (Ilkeston)
Marsh, Rt. Hn. Richard
Willey, Rt. Hn. Frederick


Fletcher, Ted (Darlington)
Mellish, Robert
Williams, Alan (Swansea, W.)


Forrester, John
Mendelson, J. J.
Williams, Alan Lee (Hornchurch)


Fowler, Gerry
Millan, Bruce
Williams, Clifford (Abertillery)


Galpern, Sir Myer
Mitler, Dr. M. S.
Willis, George (Edinburgh, E.)


Gardner, A. J.
Mitchell, R. C. (S'th'pton, Test)
Winnick, David


Garrett, W. E.
Morgan, Elystan (Cardinganshire)
Winstanley, Dr. M. P.


Gordon Walker, Rt. Hn. P. C.
Morris, Charles R. (Openshaw)
Woodburn, Rt. Hn. A.


Gourlay, Harry
Moyle, Roland
Woof, Robert


Gregory, Arnold
Murray, Albert



Griffiths, David (Rother Valley)
Nabarro, Sir Gerald
TELLERS FOR THE NOES:


Griffiths, Rt. Hn. James (Lianelly)
Noel-Baker,Rt.Hn.Philip(Derhy,S.)
Mr. McBride and Mr. Whitlock

Mr. Temple: I beg to move Amendment No. 75, in page 12, line 36, at the end to insert:
(3) Notwithstanding the foregoing provisions of this section the general betting duty shall not be chargeable on any bet in respect of which the amount staked is returnable to the
bettor by reason of the bet having become void.
This Amendment should not cause the Committee any great difficulty, because it is comparatively simple. It deals with the question of when is a bet a bet, and when is it not a bet. It seems to me quite clear that on all occasions a bet is a bet when it is struck, but the one person who wins in all instances, whether the contest takes place or not, is the Chancellor of the Exchequer.
I am dealing with the problem of void bets. A void bet is a bet that is struck on a contest or a race and the contest does not take place because of circumstances quite outside the control of the bettor or the layer concerned. Imagine, for example, that Ascot today had been deluged with a thunderstorm, which was quite a possibility, since there was at thunderstorm in London.

Mr. MacDermot: And Lords.

Mr. Temple: Yes, or Lords. If there had been a thunderstorm and deluge at Ascot, all the races might have been washed out.
Again, take the case of this year's Derby. The Minister of Agriculture might have had to determine a cancellation of the Derby because some French horses which had arrived had been in contact with horses in British stables and, therefore, it was unwise for the race to be run. In the circumstances, all the bets which had been made on the Derby would have been declared void and nobody would have been able to win neither the bookie nor the punter.
As the Bill is drawn, however, it certainly appears to us on this side that those bets would have been deemed to have been bets which had been properly made and, therefore, the 2½ per cent. tax would have been payable on them. I am sure that the Chancellor of the Exchequer did not intend this chain of circumstances to come about whereby the only people who could possibly win in those events would be the Exchequer.
A respectable precedent for our Amendment exists in connection with the duty on football fixed-odds betting. When a game of football is cancelled and there has been betting on the match and the match is declared void, the bets are void also and no tax is collected by the Revenue.
I hope very much that the Government will look at this matter extremely sympathetically. It is a matter which should be dealt with and I hope very much that I shall have a helpful response.

Mr. MacDermot: I can give the hon. Member for the City of Chester (Mr. Temple) the assurance which he requires, but I do so by saying that it is our view that the Amendment is unnecessary. The hon. Member asked the pertinent question; when is a bet not a bet? I agree with his answer. It is not a bet when it is a void bet. I am advised that this position is adequately covered under the Bill as drafted, because since, when a bet is declared void, it ceases to be a bet and is deemed never to have been a bet, it would not, therefore, be a bet upon which the Customs would be entitled to levy duty or, if it had already been paid, to retain that duty.
It might, of course, happen in the case particularly of ante-post betting that the duty would already have been paid on a bet which was subsequently declared void. In those circumstances, the bookmaker would be entitled to be refunded the amount of the duty either in the form of a repayment or as a credit against other liability to duty.

Mr. Iain Macleod: I am quite satisfied with the Financial Secretary's answer-I was about to say, as long as it is right. The hon. and learned Gentleman will know what I mean.
Subsection (1) of the Clause states:
Subject to the provisions of this section, on any bet made … with a bookmaker".
Certainly, all commentators on the Clause have taken this to mean that duty is liable as soon as the bet is made. That is to say, if I am betting, as, for example, I do almost always, on credit with my bookmaker, when I put down the telephone and he has said "Right", the bet is then made.
As I understand—and we must be careful about having ex cathedra statements about this, because, naturally, it will be for the courts in due course to decide any disputes which arise—the wording in the first line of the Clause does not wholly substantiate the point that the Financial Secretary has made. I simply ask him to check with the legal eagles on this point before Report and see whether the point which I have made has substance.

Mr. MacDermot: I assure the right hon. Gentleman that I have done that already, because I had exactly the same reaction as he did when I was originally given this advice. I read the Clause in exactly the same way as the right hon. Gentleman has done, but I am satisfied, and I have taken legal advice on this from those who are expert in this branch of the law, that what I have said is correct.
I cannot, of course, lay down the law from this Box—as the right hon. Gentleman has said, it would ultimately be for the courts to decide—but I think that it is clear from what I have said that the matter never would, or could, arise before the courts. Since the view which the Customs and Excise take of the matter is as I have explained it, it would never seek to retain the duty in the circumstances with which we are concerned.

Sir Douglas Glover: When it comes to betting, I am much more in the category of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) than that of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). I read in the papers a fortnight ago, however, of a race in Newmarket in which there was a false start. The horses covered the whole course and the stewards ordered that the race be re-run in half an hour.
Six horses were withdrawn and, presumably, the "bookies" formed a new book. During that half hour, however, would they have been expected to repay the 2½per cent. for the earlier backers on the horses? How would they ever be expected to deal with it in that way? Is not this an argument for the tax to be on winning rather than on the stake? In the case to which I have referred, I do not see how the bookmakers could physically have dealt with the problem.

Mr. Iain Macleod: In the case described by my hon. Friend, under Clause 13 of the Rules of Racing no new book is entered into. All bets stand. In the particular case quoted by my hon. Friend, all bets stood, to the fury of the punters who were present.

Mr. Peter Bessell: I am sure that the whole Committee is lost in admiration by the expositions on betting which we have had this afternoon from

the right hon. Member for Enfield, West (Mr. Iain Macleod). As the right hon. Gentleman, who can fairly be described as an expert, is clearly of the view that there could be confusion in this matter, I should like to ask the Financial Secretary whether there is any reason why the Amendment should not be accepted.
The hon. and learned Gentleman states that the Bill as drafted meets the requirements of the Amendment. That may be so, and I would be the last person to attempt to pit my knowledge against him on a matter of this sort. But, for the sake of clarity, and to put at rest the mind of the right hon. Member for Enfield. West, would it not be sensible to accept the Amendment, since doing so could do no harm and would reinforce the position as described by the Financial Secretary?

6.0 p.m.

Sir S. McAdden: Let us be certain that we have got the position right. Like my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), I was quite satisfied with the Financial Secretary's exposition until, at the end of his remarks, he referred to ante-post betting. In such a case, when a horse is subsequently scratched, the bet has already been struck and tax must be paid on it. That must be so, otherwise we would have the ludicrous position of the Customs not seeking to take the tax from the bookmaker who had already taken it from the punter.

Mr. MacDermot: My reference to ante-post betting was to illustrate how the duty might have been paid on a bet which was subsequently declared void. We will come to the details of this later. I will merely say at this point that, under the scheme which will operate, bookmakers will have an option by which they may pay weekly if they wish. If the ante-post bet was a cash bet, the duty in respect of that bet might have been paid before the race was declared void. In that case he would be entitled to a refund.
To answer the question posed by the hon. Member for Bodmin (Mr. Bessell), the House of Commons considers it preferable to try to reduce the amount of verbiage in Statutes. It has always been considered advisable not to include words which are unnecessary.

Mr. Temple: I am extremely obliged for the Financial Secretary's reply. It came as a slight surprise to me and I hope that it will enable me to bring off a double today, because I will be moving t le next Amendment. I have a happy recollection of making a good start on last year's Finance Bill, although I was not successful on that occasion in bringing off the second leg of my double.
I was obliged to my hon. Friend the Member for Southend, East (Sir S. McAdden) for mentioning ante-post betting. I am in agreement with the way in which he interprets this matter, as I am in agreement with what the Financial Secretary said on the subject.
I had no hesitation in bringing this matter to the attention of the Committee, because many people outside, and a number of hon. Members, were in doubt on this issue before it was cleared up today. However, I hope that the Financial Secretary will have another look at the matter between now and Report just in case there is any loophole or possibility of the lawyers getting to work on it. We should do our best to put the matter absolutely beyond doubt. I accept the hon. and learned Gentleman's assurance and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Temple: I beg to move Amendment No. 79, in page 13, line 2, at the end to insert:
(4) A bookmaker shall be entitled to a rebate of the general betting duty in cases where the whole or any part of the liability in respect of a bet accepted by him is shown to the satisfaction of the Commissioners to have been transferred by him to another book-maker by means of a fresh bet made by him with that other bookmaker.
I come to the second leg of what I hope will be a successful double, although this is a more difficult and complicated matter than the last. Briefly, this subject concerns hedging bets, which are mostly trade bets—bets between bookmakers—which take place on a very large scale and which, in effect, are the basis of the betting market in this country.
The object of the Amendment is, first, to see that the same bet is not taxed two, three or more times over. It may seem a little strange to hon. Members that this can happen, but I will explain later how it can happen under the Bill

as drafted. The Amendment would leave the betting and taxation position between the punter and the bookie exactly as it stands in the Bill; in other words, if accepted it would affect only trade transactions as between one "bookie" and another.
Some years ago I was a member of a Stock Exchange and, to refresh my memory about the exact method of transactions on the Stock Exchange, I telephoned a friend of mine over the weekend and put some questions to him. It is customary on the Stock Exchange, during the course of an account, for securities to change hands many times during that account, attracting the ad valorem stamp duty. In other words, there is no successive taxation or duty on stocks and shares from the trade point of view when changing hands within the market. I submit that this is a close analogy between what happens in the betting markets, particularly the market which takes place on the course every day of the year.

Mr. Joel Barnett: Would the hon. Gentleman tell us the large percentage of the whole which is the subject of hedging? Does he know the size, the percentage, of this sort of betting in terms of the amount of overall betting?

Mr. Temple: No. I do not know the exact percentage, but during my speech, I will indicate the size of the market on the course and, equally, I will try to indicate the amount of inter-office business that takes place.
I should explain the meaning of the word "hedging". It means that a bookmaker takes a bet of fairly large dimensions and immediately seeks to spread it over his confreres in the betting business because he does not want to stand the enormous risk himself. As I have connections with Lloyds, I might say that it is somewhat similar to the reinsurance business which takes place in the great insurance market in Lloyds. When a broker goes to an underwriter with a very large risk, that underwriter says. "I will accept that risk" knowing perfectly well that he has some underwriting arrangements which will enable him to spread the risk all over the market.

Mr. Gwilym Roberts: It is not quite as simple as that, because in Lloyds one has a simple transfer of a very large undertaking. In this case the complication of hedging is that the bet transferred at the second, third or later stages may not be of the same form as the original bet. This is the difficulty, particularly when one thinks in terms of an accumulator bet which is liable to cost the original bookmaker a large amount of money in view of the large investment which goes on the last horse in the accumulator. This complexity makes it impossible to draw a parallel with Lloyds.

Mr. Temple: I am obliged to the hon. Gentleman for that intervention, and I think that we are at one, as I will show. What is in fact being hedged is the risk, and the risk at Lloyds is put down in the policy. The risk in the case of betting is the risk that a particular animal will win. In other words, it is the risk which is hedged. I brought in the Stock Exchange and Lloyds merely to provide an analogy to show how risks change hands.
The best way to explain these provisions is to give some examples. My first example is of an accumulator bet of some consequence which took place comparatively recently. Unfortunately I was not a winner in that enterprise, which was a five horse accumulator, something which makes one's mouth water on a day when the Ascot races are being run. This was a particularly successful accumulator and provides an excellent illustration.
The most simple example of a hedging bet is where a small bookmaker, possibly in a small town such as Malton in Yorkshire, where there is possibly one trainer, finds that when that trainer has a fancied horse running there is immediately a big run of bets on that horse. He will probably take £100, £200 or more in bets on that horse with practically no field money whatever on any of the other horses. The first thing he must do is to lay off a proportion of the wager. So he telephones either one or more other bookmakers whom he knows and hedges that bet, or places another bet with another bookmaker.
This is where the provisions of the Bill come in, because every time that bet moves around between bookmakers it

attracts the 2½ per cent. duty. That is why I said that the original wager by the punter could be taxed two, three or more times—indeed, as many times as it travels around the betting markets.

Dr. M. P. Winstanley: How can the hon. Gentleman refer to the same bet travelling around when clearly a bet which is laid off or hedged is often hedged at different odds? Such a bet changes odds from time to time so that, in effect, a number of different bets at different odds are being placed rather than the same bet travelling around.

Mr. Temple: I have no doubt that the Financial Secretary will be making a case such as that. However, I submit that whatever the odds during the transactions the bet is the same money that was originally invested with that small bookmaker in Malton. I am simply making the point that these hedging transactions are trade transactions between bookmakers and that they are part of the whole mechanism of the betting market.
I will give another instance—because these concrete instances are of importance—that of a stable commission. It is the usual thing for a bookmaker to receive a stable commission of £1,000 to place on a horse. The bettor concerned does not want the trouble of ringing up innumerable bookmakers, nor does he want the information to go too wide that the stable is backing a particular horse, so he invests that money with one bookmaker. I should think that on many occasions the bookmaker, knowing the stable concerned, lays the whole lot off. When that bet is placed it attracts the 2½ per cent. duty, so I should have thought that at that moment of time the Chancellor of the Exchequer would have been satisfied if he had had full duty paid on that bet as such.
Perhaps I might now trace that bet from that original stable commission through all the various hands, through the blower, of which we have heard in previous debates today, back to the course. Having arrived at the course through a whole series of transactions which would not occasion any betting slips whatsoever, just nods, winks and little wags of the finger, that £1,000 will again be spread over the whole of the betting market.
I submit that it is unfair that every time these trade bets are moved around in the course of market transactions they should attract fresh duty, because in the specific case of a £500 bet which was a stable commission-and I have here the information on the way this bet travelled around—it would have attracted £250 in d Ity before it finally laid itself to rest in the books of the ultimate layers concerned.
I turn now to another example. The hon. Member for Bedfordshire, South (Mr. Gwilym Roberts) spoke about accumulators. I shall give a practical example of a five-horse accumulator. All these horses won. The last horse in the five-horse accumulator was Wild Sunset, which won at 7 to 4 in May of this year. The original layer had a 30s. investment, the tax on which would have been 9d. The first horse won at 6 to 1, and the bookmaker concerned took out a £10 accumulator on the last four horses in the accumulator.
As the bet was subsequently hedged, it involved a total hedging of £2,400, which would have attracted a tax of £60. I think it is of interest to the Committee to realise that an original 30s. accumulator could, in the course of hedging bets, attract a tax of about £60. In addition, the last trade bookmaker who had Wild Sunset laid in his book laid off £1,000, on which the tax was another £25, so that the total tax involved in the transaction was more than £85. The winner—and I am glad to say that there was a winner of this five-horse accumulator—won £5,500. If the bet had been dealt with on the basis of returns, the Chancellor would have collected £137, as opposed to the £85 which he would collect if my Amendment were not accepted.
The Amendment is very well precedented indeed. I was one of the hon. Members who sat through the whole of the discussions on the Betting and Gaming Bill in Committee upstairs. As I was not satisfied with the introduction of betting shops in this country before I had some experience of them, I went over to the Fish Republic to see how they were working there. I came back not convinced that they were a good thing but that they were a better thing than the system which was operating, largely illegally, in this country. I therefore felt able to vote

for betting shops in this country, and I naturally concluded that ultimately there would be a tax on betting. I forecast that at the time.
Despite the remarks of my right hon. Friend, I think that we can go to the Irish Republic for a number of respectable precedents. When a bookmaker in Southern Ireland lays off bets he is required to furnish the Revenue authorities with the name and address of the bookmaker with whom he has hedged, and that is the principle embodied in the Amendment.
I have been racing in Ireland, I have betted on course, and I have been to betting shops. I never placed a bet in one, but I have been into them to see how they work. I have also had correspondence with the Irish Racing Board during the last few days. I know that their system works smoothly from an administrative point of view, and their costs of collection are very small indeed relative to the amount of money they collect. They use this system of special rebate with regard to hedging bets.
6.15 p.m.
Significantly, there is an English precedent in this matter as well, because in the 1926 Finance Act provision was made whereby hedging bets could be exempted from double taxation. The appropriate regulation was made and those bets were exempted from double taxation.
I would not wish in any way to mislead the Committee in moving the Amendment, but I should like to make a short quotation from what Sir William Croft, then the Chairman of the Board of Customs and Excise, said to the 1949–51 Royal Commission on Betting. He said:
Laid off bets did not come under the betting duty. They were excluded, and as far as I know that worked quite easily in practice, but I do not think sufficient allowance was made for it in the estimate.
Thus we see that Sir William Croft in his evidence said that there was no practical difficulty whatsoever in accepting an Amendment of this nature, nor in working this system.
One thing which I should like to emphasise—and perhaps the Financial Secretary has not overlooked it—is that if the Amendment is not accepted the situation may be extremely prejudicial to


the small bookmaker. I described the small bookmaker a few moments ago as someone in a small town like Malton who takes a fairly sizeable commission. He is not linked in business in any way with other bookmakers, and therefore under this legislation he has to negotiate a fresh bet.
The position of a large integrated chain of bookmakers is different. Here we have a large company with offices all over the country which are part of one organisation and no subsidiary companies are involved. I submit that in art organisation like this, when money is moved or hedged between the various offices of the company, no fresh bet is struck because it is not a fresh transaction as between one bookmaker and another, or between a punter and a layer. It is purely a matter of moving money between one office and another.
It is the custom in the betting industry—I do not know why this is so, but it is—for large bookmaking organisations to have, say, Joe Bloggs, Northern, Joe Bloggs, Birmingham, Joe Bloggs, London, and Joe Bloggs, Trade. It is normal for all these various Joe Bloggs subsidiary companies to lay off with Joe Bloggs, Trade. If this system which
is proposed by the Government is brought into being, I submit that the probable likelihood is that these subsidiary companies will be put into liquidation and Joe Bloggs will become one company throughout the country. The result will be that money will be able to move around the Joe Bloggs organisation without attracting any tax whatsoever. That will not happen with the smaller bookmaker, because he will have to lay off with other outside interests and thereby make a separate bet on any occasion when he pays on the hedging operation.
I apologise for going into this matter at some length, but it is complicated and is of great importance to my next point, which concerns the betting market. I intervened in the speech of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) to say that the main betting market, that is, the trade transactions, is the course. Inter-office transactions take place. I should not like to hazard an estimate as to whether interoffice transactions are larger than the transactions which go back to the course,

but I should think that they probably are.
The fact remains that it is on the course that the market in starting prices is made. The Sporting Chronicle and Sporting Life representatives take the average price when they walk down the rails immediately after the "off" and that becomes the starting price, but that is only a reflection of the prices on offer by the rails bookmakers at the moment of the "off".
I come now to my final point, which is possibly the most important one with regard to the Amendment. That is, the detrimental effect which this may have on the whole betting market. I unfortunately share the view expressed once from these benches that this provision may be an indirect attack on the whole bookmaking industry. It is widely known that in many quarters a Tote monopoly has been sought. I was successful in this House on one occasion in fighting fairly hard against the introduction of a Tote monopoly, but if the main market upon which the starting price depends is upset and its mechanism destroyed, the next step will lead straight to a Tote monoply.
I regard this matter as of the highest importance not only to the bookmaking fraternity but to those many people who enjoy having a bet at starting price, enjoy going to a race meeting, enjoy watching the race on television and who are able at one and the same time to hear the odds being reported as they vary in the market on any day.
The point which I should like to leave
with the Government is that their proposals are very unreasonable. It is quite unfair to propose what in effect will be double, treble or quadruple taxation.

Mr. Rees-Davies: I want to be brief in underlining two points. We have just heard a very lucid and expert appreciation of the situation by my hon. Friend the Member for the City of Chester (Mr. Temple), which requires no underlining apart from these two further points.
The first is that I share the deep anxiety for the small bookmaker unless we solve this problem. Hedging is not really betting at all. It is part of the ordinary mechanism of the operation of the industry. Most of the small men in the trade do not carry the substance of the bet.


They pass it on to Hill's or Ladbroke's and get a commission of perhaps Is. in the E. They are doing nothing more nor less than merely accepting a bet from the punter from which they take a small corn-mission before passing it on. They hold part of the business, but what they cannot afford must be passed on. This operation is, therefore, only part of the ordinary mechanism of their business.
My second point is to contrast the operation of the two methods of business, of the Tote versus what is, in fact, the effective use of the trade mechanism which the bookmaker uses, operating through telephonic communication by means of "the blower". The Tote has a bottomless purse. The Tote is us, the nation. It takes a direct sum of money in the case of the jackpot out of each race—17½per cent. of the jackpot on the card. As it goes on over the season and as it has the State behind it, in effect, the Totalisator is not concerned with the movement of any market or any price except the price after the "off". One cannot go to the Tote and say, "Thank you very much. I want it at 6 to 1 now."
The whole colour of racing, the thing which makes British racing the greatest in the world and so much better than American, French or any other racing to people who understand the sport of kings and enjoy it, is not just the colour and noise of the bookmaker, it is the fact that one can beat the book. If one is shrewd in a three-horse race—it is the greatest pleasure—one can win before the "off". One can back all three horses with bookmakers before the "off".
The essence of the point concerning the operation and mechanism of betting is to understand that what the bookmaker is doing is not laying other bets at all but trying to ensure that he has a balanced book which will operate to his benefit.
Therefore, what happens is simply this. Into Hill's in London or Ladbroke's comes a large sum of money from all parts of the country on the favourite for, say, the Hunt Cup. What will they do? If they keep the whole of that sum of money, of course the price of that favourite on the course will be greatly higher, so the man picks up a telephone and blows through to the representative on the course, who is the representative of the agency which owns the blower

Exchange Telegraph—which has nothing to do with the bookmakers and which charges all the bookmakers a sum of money for that service, and says, "We have £10,000 or £20,000 on this horse. Will you please lay off £10,000 for us?"
Of course, Hill's will come through for £10,000 or £20,000 a go. One bookmaker does not want the lot, so it is laid off over the whole range of the trade in the ring. One says, for example, that George will have £500 at certain odds. Therefore, the mechanism which
creates the price in the ring is determined by thousands of transactions. It is inconceivable that that should be taxed. The two processes are exactly the same. This is part of the ordinary operation of the whole mechanism of the game. This is part of ordinary races. It is not a bet struck at all. It is part of the ordinary inter-office mechanism of balancing the book.
Therefore, I come back to the point that the Government would not need to trouble with this Amendment if they would accept that all on-course betting should be treated in a different way by a fixed tax. Once again that is the answer. So I come back to the earlier point.
On hedging, if there were an arrangement by which the Government said to the race course, "We want £20,000 a day from Ascot for the Inland Revenue office; that is our price. You fix the bets and charge the amounts", there would be no need to bother about all this extra betting and "the blower" and so on. The Government would get their money simply and easily.
I beg the hon. and learned Gentleman to recognise that he would break down the whole mechanism of betting and play straight into the hands of the Tote monopoly boys if he does not make some provision to accept the Amendment or arrive at this result in some similar way.

6.30 p.m.

Mr. Barnett: I do not pretend to be anything like so expert as the right hon. Member for Enfield, West (Mr. Iain Macleod) or the hon. Member for the Isle of Thanet (Mr. Rees-Davies). We must be very careful in any legislation to be fair and to be seen to be fair. We


must be very careful not to allow any prejudice that we might have to temper the justice of the case.
I want to look not at the general hedging case made out by the hon. Member for the City of Chester (Mr. Temple) but rather at the case of the small betting shop, the proprietor of which, I understand, is primarily a commission agent and not a bookmaker. I understand that the commission is generally about 5 per cent. To do a turnover of, say, £100,000, he would need a betting shop in which the overheads commensurate to that sort of turnover might well be around £2,000 or £3,000, and possibly more. On this basis, the present betting duty would be £2,500 on a £100,000 turnover, if the duty is to be on the turnover, whereas his real turnover is his commission of £5,000.
This is a different sort of hedging, but it amounts to the same thing. I imagine that the matter will also be complicated by the fact that even the small betting shop will do a little carrying of its own bets Therefore, it is not perhaps quite so simple to exempt anybody who is a commission agent, in the sense that nobody will be a 100 per cent. commission agent, although I imagine that a large number of small shops will be very largely commission agents and not bookmakers.
By this Measure, we could well be closing down or effecting take-overs of one-man shops. If this is what we want to do, I think that we should be more honest and do it in a different way than by a tax of this nature.
I am sure that we shall be told that there is a great opportunity for evasion if we allow any form of exemption for hedging. In order to try to find the possible extent of any evasion, I intervened to ask the hon. Member for the City of Chester if he had any figures for the percentage of the whole. I have not been able to find any, and apparently neither has he. What concerns me is that we already have what I believe to be a very low yield from the tax, at £11 million. If the figure for the exemption of hedging is very substantial and the yield becomes almost non-existent, all it will mean is that, taking the large hedgings mentioned by the hon. Member for the Isle of Thanet, instead of fixing the

level at 2½ per cent. we shall fix it at 10 per cent. That sort of thing may well be all right, but we should be clear what we are doing.
If the yield would be reduced only slightly by granting the exemption, or if it could be granted to the small man who would be literally closed down by the duty, the Treasury should in fairness concede it.
If it amounts to a substantial sum on the large amount of hedging referred to by the hon. Member for the City of Chester, that is tantamount to saying that we are having a higher level of tax. I do not object to that, but I think that it would be unfair if we were in a roundabout way doing away with the small man.

Mr. Norman St. John-Stevas: I can add very little to the extremely detailed and able exposition of the case for the Amendment which was made by my hon. Friend the Member for City of Chester (Mr. Temple). We all learned a great deal from that exposition. I am not a very keen racing man myself, but I have found this debate and the previous one something of a liberal education.
I wish to emphasise that it is a basic principle of taxation that, within the limits of the disagreeable situation created by taxation—and all taxation is an unfortunate interference with individual rights—the incidence of the taxation should be fair and reasonable. I was very impressed by the point made to this effect by the hon. Member for Heywood and Royton (Mr. Barnett). I am only sorry that he seemed to abandon the position of principle in favour of the more utilitarian considerations of the yield of the tax in the latter part of his oration. I do not think that bookmakers or betting should be encouraged. Quite the contrary, but whatever view one may take of their occupation, bookmakers are human beings.

Mr. John Rankin: Only when the punter pays them.

Mr. St. John-Stevas: It is hardly a matter of controversy that they are human beings and that they have their rights. The effect of the Clause, if unamended, in cases where a bet is laid off or in the situations outlined by my hon. Friend the Member for the City of


Chester would be that what is in essence one transaction would attract taxation more than once. This is surely quite contrary not only to the principles of our taxation but to the ordinary rules of natural justice.
Another undesirable side effect of
Leaving the Clause unamended would be that it would reduce the very small amount of revenue which is at present available to the Levy Board. At present it gets the rather paltry sum of about £3 million a year. I fear that British racing is not in the happy state described by my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) in a lyrical passage. It is in a very poor state as compared with racing, say, in France from the point of view of the stud situation or the amenities provided on the racecourse. If unamended, the Clause would worsen the situation of British racing by reducing even that small sum still further.
I do not wish to dissent from what my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) or my hon. Friend the Member for the City of Chester said, but I tentatively question whether the universal Tote system is such a closed question as they seemed to presume. I think that there is a lot to be said for the Tote system. For example, in France, which has this system and where there is a levy of about 22 per cent., the amount of money raised to invest in racing as such is— —

Sir S. McAdden: On a point of order. I shall be glad to know if we are to have a debate on the question of a Tote monopoly and its advantages, because it seems to me that it would not be in order on the Amendment. If you rule that it is, Mr. Grant-Ferris, I shall be delighted to take the matter further.

The Temporary Chairman (Mr. Grant-Ferris): It would not be in order on this Amendment.

Mr. St. John-Stevas: Thank you, Mr. Grant-Ferris. I have finished my point in any case, and I was merely placing the Amendment in a wider setting. The question of the Tote had been raised in earlier speeches and so I was trespassing no further than other speakers in this debate have done. I hope that the Financial Secretary, who is a most

just and reasonable man, will accept the Amendment, because the case for it in equity is overwhelming.

Mr. Gwilym Roberts: Originally I had no intention of intervening in the debate on this Clause, but I have been tempted to do so by some of the naïve statements made by hon. Members opposite. If there were any question of there being double taxation of the punter, I would be the first to oppose it, because the poor punter is already badly enough done by.
A very naive picture has been presented. The hon. Member for Isle of Thanet (Mr. Rees Davies) even went so far as to speak of a three-horse race in which the punter could back each animal, presumably with varying stakes, and thereby make a profit irrespective of which animal won. These things have happened, but only once in heaven knows how many races. This could possibly be done on the course if the punter were a world 100-metres champion who was also possessed of the mind of Euclid to enable him to calculate the appropriate stake to place on each animal. It is absurd to believe that this is a common happening, as many of us know to our cost.
A sad picture has been presented of the small bookmaker. I do not wish to start the Tote monopoly argument. I am all in favour of the small bookmaker as against the Tote monopoly. But having said that, we should not imagine for a moment that the small bookmaker is a philanthropic animal. He is not. He often accepts a bet at 11 to 10 and lays it off at 5 to 4. He makes a commission of ls. in the £ by transferring the bet without taking any risk whatsoever. This is a duty of only 6d. in the £ which will be taken from his commission for merely acting as the middleman.
I repeat that if there were any case of there being double taxation of the punter I should be the first to oppose it. The only thing this duty might achieve is perhaps a small marginal reduction in the profits of some small bookmakers.
Unfortunately, I raised one hare. I suggested that bets were not always transferred in the same form as that in which they were originally received. This is true. Immediately the hon. Member


for the City of Chester talked about five-horse accumulators. Anybody in the betting world knows that these are very rare bets indeed. To give a simple example, the racing pundits employed by the national newspapers sometimes—about once or twice a season in the case of the best of them, and not at all for the others—give six winners at a meeting. Usually, when they succeed in doing this the overall accumulator might produce something approaching 100 to 1 because the animals predicted to win are generally the favourites or near-favourites Even assuming that these pundits did this once every flat-racing season, this would be once out of 250 or more meetings. To talk of huge five- or six-horse accumulators coming up is not a realistic way of discussing betting. When I suggested that bets were transferred differently, I meant that they were transferred sometimes into doubles and possibly into combinations. As one hon. Member pointed out, the odds are often changed as well.

6.45 p.m.

Mr. Iain Macleod: The hon. Gentleman is making an extremely interesting point. It does not necessarily matter whether the five-horse accumulator comes up. By the time that the first two have won the hedging bets will have already started and will go on through the third, the fourth and the fifth, even though the original stake may be only 10s. and even though it eventually be lost.

Mr. Roberts: This is partly correct. It will not go on for the third, the fourth and the fifth if the third falls. It will go only as far as the second stage. There was talk by one hon. Member opposite of £60 as being the sort of taxation. This would be only after the fourth had won and when they were looking towards the fifth on a very high-priced accumulator.

Mr. Temple: The hon. Gentleman is making great play with the fact that I mentioned a five-horse accumulator. In fact, the hon. Gentleman invited me to give an example of an accumulator. My first example was a normal hedging transaction by a small bookmaker.

Mr. Roberts: I accept that. I said that I had introduced the hare of the accumulator bet. Some hon. Members

opposite have presented a rather unrealistic viewpoint of bookmaking. The bread and butter transactions in this game are not five-horse accumulators. The bread and butter transactions are singles, doubles, perhaps trebles, but they do not often go much beyond that. When the small bookmaker transfers, he usually transfers to be on the safe side of the transaction. This proposal will not bring about double taxation of the punter. It may result in a very thin shaving of the small bookmaker's profits. This will be the only effect of the Clause.

Mr. MacDermot: Once again, we have had a very interesting debate on a subject which I know has attracted a great deal of interest outside Parliament as well as inside. It is important to establish the justice and rightness of what we seek to do in respect of laid-off bets. Some people have taken the view—it was expressed by the hon. Member for the City of Chester (Mr. Temple) in moving the Amendment—that this is a form of double taxation and is unjust. I say at once that in my view this is a misconception.
The double taxation argument is based on the assumption that the laid-off bet is the same bet. It is not the same bet. It is an independent and separate bet. It is a fresh bet. I would only ask the hon. Gentleman to study his own Amendment which says that he wants a rebate to be paid where, in effect, the bookmaker lays off
by means of a fresh bet made by him with that other bookmaker.
It is a fresh bet, as the hon. Member for the Isle of Thanet (Mr. Rees-Davies) said, which takes place and which plays its part in the whole operation of our betting system. As the hon. Member for the Isle of Thanet said, laid-off bets play a very important part within our bookmaking system and, through the system of passing on the bets, many of which ultimately end up on the course, they ultimately affect the starting price of the horses.
The acceptance of laid-off bets represents a very large part of the business of some of the largest bookmakers. My hon. Friend the Member for Heywood and Royton (Mr. Barnett) asked how large a part and what the figures were. I do not know, and I do not think that


anyone knows. Some people may be able to make estimates, but I am not in a position even to do that. However, there is no doubt that it represents a very large part.
If we were to accept this Amendment, therefore, we would seriously affect the yield, and the result would be that we Mould have to look again at the rate. This rate of 2½ per cent., which has been criticised in some quarters as being too low, is a rate we arrived at after taking into account that we were including laid-off bets among the bets subject to the duty. Hon. Members have quoted the example of Ireland where laid-off bets are not included, but the rate of duty in Ireland, of course, is higher than the rate we propose to introduce. I think I am right in saying that there is a variety of duties in Ireland. I do not know the full details of the system there, but betting is affected by a general turnover tax of the order of 2½ per cent. I read in the newspaper yesterday that this is to be increased, and I do not know whether that will affect betting. In addition, there is a separate betting duty which is now, I think, about 10 per cent. on the stake. Clearly, one may assume that the Irish, in fixing their rate, took into account that they were excluding laid-off bets.
If one believes, as I do, that, whatever way one imposes these duties, ultimately the way in which the bookmakers will recover the duty is by adjustment of the odds in the same way as they recover an amount sufficient to cover their overheads and profits, then, in a sense, it does not matter whether one has the Irish rate of duty and excludes laid-off bets or has the lower rate of duty and includes laid-off bets. The bookmakers, with heir great experience and skill, will find a way to adjust the odds so as to pass the total burden of the duty, whatever it may be, on to punters as a whole.
Let us take the Amendment and assume, in spite of what I have argued, that the preferable and better way would be to exclude laid-off bets. Even if the Amendment itself were workable—for reasons I shall give in a moment, I think that it is not—it would lead to rebate, as my hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts) pointed out, in only one type of laying off, namely, the laying off where

one is able to identify the laid-off bet as passing on the risk of an identifiable bet. This is clear from the terms of the Amendment.
But not all laying off takes that form. As the hon. Member for the Isle of Thanet said—I think it was he who made the point—what the bookmaker does is to lay off his total liability on his book at a given moment. He may not necessarily do this by laying off the liability with a bet on the same race or a particular horse. He may do a hedging bet on a different contingency than the one on which the liability exists which he is seeking—I accept the hon. Gentleman's analogy—to reinsure.
The bookmaker may also in his laying off introduce an element of betting of his own. He may to some extent be betting on his own account, mixing the two things, as it were, a hedging element and a speculative or betting element of his own, in the same bet. This kind of bet would not qualify for rebate under the Amendment.
Again, it would not be possible under the Amendment to grant rebate in the case of the multiple bet to which the hon. Member for the City of Chester referred because the difficulty with the multiple bet is that the laying-off transaction or series of laying-off transactions resulting from a multiple bet may not be undertaken until some of the earlier legs of the multiple transaction have been successful. How, then, is one to relate with sufficient certainty for these fiscal purposes the laid-off bet to the original stakes or to any of the subsequent legs of the transaction?

Mr. Temple: Has the hon. and learned Gentleman forgotten the evidence of Sir William Croft to the Royal Commission on this matter? He said that it worked quite smoothly under the 1926 legislation.

Mr. MacDermot: I shall come to that. I heard what the hon. Gentleman said, but I do not agree with the view there expressed. The hon. Gentleman quoted the example of Ireland, and it seems that people are satisfied with the system there, but, as I pointed out, it has a different effect on the rate.
In our view, this Amendment would not be workable. To try to exercise control over it would require a large addition to the staff and a great increase


in the work of verification and checking which would be likely to lead to bad feeling and irritation. Envisaging a case in which bookmaker A laid off with bookmaker B, one has to check that the bet was included in B's own betting duty return and that it was a genuine laid-off bet by A. A very great deal of checking would be necessary for this purpose. Obviously, there would be considerable scope for evasion by bookmakers claiming that bets were laid-off bets though they were not in fact such. I am advised by the commissioners that, in their view—this is our view also—the exemption of laid-off bets was one of the reasons for the failure of the 1926 betting duty.
Both the hon. Member for the Isle of Thanet and the hon. Member for the City of Chester discussed the position of the small bookmaker, saying that he would be particularly hard hit. My first observation on this is that many small bookmakers, as the hon. Member for the Isle of Thanet said, pass on bets to large bookmakers in circumstances in which they are not themselves carrying a risk but are operating on a commission. In those cases, provided that there was a prior agreement with the large bookmaker pursuant to which they pass on the bets in that way, there would be no liability to double duty. They would for this purpose be merely the agents on a bet as between the punter and the large bookmaker, and there would be only one liability.

Mr. Barnett: I can readily follow how this would work in a 100 per cent. agency, but how would it apply in the 50, 70 or 80 per cent. case? How would it be worked out in practice?

Mr. MacDermot: I would not like to try to give a specific answer without knowing the details of the particular transaction. Off the cuff, I imagine that, if the true legal position were that, in effect, the bookmaker split a bet which he had taken himself, carrying the risk of one part and separating off another part and passing it on to the main bookmaker, he merely being the agent and taking a commission on this latter part, the duty would be treated separately for the two parts. I imagine that that would be so, but it

must depend on the terms of the agreement.

Dr. Winstanley: I am trying to follow this, but, as I see it, the position of the small bookmaker is exactly the reverse of what the Financial Secretary has described. The small bookmaker accumulates multiples of very small bets, then passing them on to the big bookmaker. He does not collect a big bet and divide it up, passing on parts to the large bookmaker.

Mr. MacDermot: I have created the difficulty which I referred to earlier. If one gives way too much, one is then asked a question on a point to which one is about to come.
I have dealt with the position of the small man who is acting merely as agent. It is then said that our proposals will hit the small bookmaker who receives bets on his own account and then passes them on. But he is not the one liable to the duty on the laid-off bets. It is the large bookmaker who pays the duty on them. This may affect the odds, but it is part of my case that it will do so. The duty on the laid-off bets can, should and will affect the odds, and, when experience builds up, the odds will reflect the liability to duty, including the liability to duty on the laid-off bet.

Mr. Temple: The hon. and learned Gentleman has introduced the point about agency, which is most important. Is he saying that, if a small bookmaker has an agency agreement all over the country, he can do his hedging without attracting any tax whatever or only tax relative to the proportion of the agency agreement which he has with those other bookmakers?

Mr. MacDermot: No, I did not introduce anything. All I did was to answer a point raised by the hon. Member for the Isle of Thanet—I hope that I have answered it satisfactorily—namely, the case of the small bookmaker who does not in fact bet on his own account but who accepts bets as agent for a larger bookmaker with whom he places the bets. He does not stand to lose. I am speaking here of pure agency. He does not stand to lose anything. He just gets a commission on the transaction. It is a matter of pure agency and in such a case there is one bet and one bet only. The Revenue


is entitled to only one lot of duty, which it would collect from the large bookmaker with whom the bet is truly placed.
7.0 p.m.
I come next to the case of the large chain of betting shops all under one ownership. They may at the moment, as was said, be split into subsidiaries, but there may well be an incentive now for them to join together again as one company. In such a case, if what they do is, so to call it, laying off within the business, they will not have to pay a second lot of duty on the laid-off bets for the simple reason that they will not be laid-off bets. It is, in fact, a big concern, and it will enjoy one of the advantages of large-scale operation which one hears about in many other fields of economics today. Their position is comparable to the example which the hon. Member for the City of Chester gave of the stockbroking firm transferring a share several times among clients within the same firm. Though not closely analogous, it is a comparable situation. One must look at the reality of the situation, which is that in that case there is not a separate and laid-off bet.
Once again the bogy of the Tote monopoly was raised. I shall not answer that again. It may be referred to many times in our debates. I hope that I have answered it completely and in unequivocal terms. I stand by what I have said and nothing will be gained by repeating it.
The hon. Member for Chelmsford (Mr. St. John-Stevas), who has now left us, raised a further point, saying that the effect would be to reduce the sums available to the Levy Board. This would be so only if it reduced bookmakers' profits, and this will depend upon the skill with which bookmakers pass on the duty. If the conclusion I have suggested is right, that, if we were to accept the Amendment, we would have to change the rate in order to make good the yield, this could have no effect as regards the Levy Board. As the Levy Board has been mentioned, all I say is that we believe—I think that some members of the Levy Board themselves believe this, too—that the general effect of the introduction of this duty, with the supervision and control of bookmaking transactions which will result from it, will be likely to have a beneficial effect on the total amount of the levy.

Mr. Temple: I accept that this is a substantial matter, but I cannot agree with the hon. and learned Gentleman when he raises a whole lot of technical difficulties as to why the mechanism which I have proposed for hedging bets cannot be operated. I said that Sir William Croft, long after the 1926 legislation had been finished, in his evidence to the Royal Commission said that the introduction of a method of exempting hedging bets presented no difficulty. Equally, it works easily and cheaply and the administration is not difficult in the Irish Republic. If the hon. and learned Gentleman had the will he could certainly find the way to meet us on this issue.
The two most significant points in the debate came from the Labour benches, when both hon. Members speaking from that side said that they wanted to make sure that the small bookmaker was not prejudiced. I am afraid that prejudicing the small bookmaker is just what the result of non-acceptance of the Amendment will be. The Financial Secretary made it perfectly clear that the large chains throughout the country will be able to hedge their bets without attracting any duty. The Financial Secretary made that perfectly clear.

Mr. MacDermot: I did not. The large bookmakers do not need to hedge because they are large enough to carry the risk themselves. What the hon. Gentleman is inviting us to do is to interfere in the economics of the bookmaking business by giving compensation to the small bookmaker for the fact that he is small. It is no concern of ours.

Mr. Temple: The hon. and learned Gentleman is playing with words. I said when I opened the debate that I would not specifically define hedging, but it means spreading the bets which one receives over the rest of the market and for the large chain the whole market is owned within the chain.
I forecast that if the Government go on with this proposal the end may well be that there will be a few small bookmakers in this country acting purely as agents for the large bookmakers, with the result that the large bookmakers will get much larger. They will do away with their subsidiary companies and will form unitary companies throughout the


country and will move about all their equalising transactions through the medium of their own organisations. We would regard that as a very unsatisfactory situation.
We regard this provision as unfair generally and particularly unfair for the

small bookmakers, and I shall therefore advise my hon. and right hon. Friends to go into the Lobby in support of the Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 94, Noes 178.

Division No. 22.1
AYES
(7.7 p.m.


Alison, Michael (Barkston Ash)
Harvey, Sir Arthur Vere
Nott, John


Astor, John
Harvie Anderson, Miss
Osborn, John (Hallam)


Barber, Rt. Hn. Anthony
Hawkins, Paul
Peyton, John


Batsford, Brian
Heseltine, Michael
Pike, Miss Mervyn


Blaker, Peter
Higgins, Terence L.
Pink, R. Bonner


Brains, Bernard
Hiley, Joseph
Price, David (Eastleigh)


Buck, Antony (Colchester)
Hogg, Rt. Hn. Quintin
Pym, Francis


Bullus, Sir Eric
Hordern, Peter
Rees-Davies, W. R.


Carlisle, Mark
Howell, David (Guildford)
Roots, William


Cary, Sir Robert
Hunt, John
Rossi, Hugh (Hornsey)


Chichester-Clark, R.
Iremonger, T. L.
Russell, Sir Ronald


Clark, Henry
Jenkin, Patrick (Woodford)
Sharpies, Richard


Clegg, Walter
Jennings, J. C. (Burton)
Shaw, Michael (Sc'b'gh & Whitby)


Cooke, Robert
Joining, Michael
Sinclair, Sir George


Craddock, Sir Beresford (Speithorne)
King, Evelyn (Dorset, S.)
Stodart, Anthony


Crouch, David
Legge-Bourke, Sir Harry
Stoddart-Scott, Col. Sir M. (Ripon)


Cunningham, Sir Knox
Lloyd, Ian (P'tsm'th, Langstone)
Summers, Sir Spencer


Dean, Paul (Somerset, N.)
McAdden, Sir Stephen
Tapsell, Peter


Deedes, Rt. Hn. W. F. (Ashford)
MacArthur, Ian
Taylor, Frank (Moss Side)


Digby, Simon Wingfield
Maclean, Sir Fitzroy
Temple, John M.


Elliott, R. W.(N'c'tle-upon-Tyne,N.)
Macleod, Rt. Hn. lain
Thatcher, Mrs. Margaret


Galbraith, Hn. T. G.
Maddan, Martin
Turton, Rt. Hn. R. H.


Gibson-Watt, David
Maxwell-Hyslop, R. J.
Vaughan-Morgan, Rt. Hn. Sir John


Gilmour, Sir John (Fife, E.)
Maydon, Lt.-Cmdr. S. L. C.
Vickers, Dame Joan


Glover, Sir Douglas
Mills, Stratton (Belfast, N.)
Walker, Peter (Worcester)


Goodhart, Philip
Miscampbell, Norman
Ward, Dame Irene


Grant, Anthony
Monro, Hector
Wills, Sir Gerald (Bridgwater)


Griffiths, Eldon (Bury St. Edmunds)
More, Jasper
Wilson, Geoffrey (Truro)


Gurden, Harold
Morrison, Charles (Devizes)
Woirige-Gordon, Patrick


Hall, John (Wycombe)
Murton, Oscar
Worsley, Marcus


Hall-Davis, A. G. F.
Nabarro, Sir Gerald



Harris, Frederic (Croydon, N.W.)
Reeve, Airey
TELLERS FOR THE AYES:




Mr. Younger and Mr. Eyre.




NOES


Abse, Leo
Cooke, Robert
Hamilton, James (Bothwell)


Anderson, Donald
Cousins, Rt. Hn. Frank
Hamilton, William (Fife, W.)


Archer, Peter
Cronin, John
Hannan, William


Ashley, Jack
Dalyell, Tam
Hart, Mrs. Judith


Atkins, Ronald (Preston, N.)
Davidson, Arthur (Accrington)
Henig, Stanley


Atkinson, Norman (Tottenham)
Davidson,James(Aberdeenshire,W.)
Herbison, Rt. Hn. Margaret


Barnett, Joel
Davies, Dr. Ernest (Stretford)
Hilton, W. S.


Beaney, Alan
Davies, Harold (Leek)
Hooley, Frank


Benn, Rt. Hn. Anthony Wedgwood
Davies, Robert (Cambridge)
Horner, John


Bennett, James (G'gow, Bridgeton)
Dewar, Donald
Houghton, Rt. Hn. Douglas


Bessell Peter
Diamond, Rt. Hn. John
Howarth, Harry (Wellingborough)


Bishop, E. S.
Dickens, James
Howie, W.


Blackburn, F.
Dolg, Peter
Hughes, Rt. Hn. Cledwyn (Anglesey)


Boardman, H.
Dunnett, Jack
Hughes, Emrys (Ayrshire, S.)


Booth, Albert
Dunwoody, Mrs. Gwyneth (Exeter)
Hughes, Hector (Aberdeen, N.)


Bowden, Rt. Hn. Herbert
Dunwoody, Dr. John (F'th & C'b'e)
Hughes, Roy (Newport)


Bray, Dr. Jeremy
Edwards, William (Merioneth)
Janner, Sir Barnett


Brooks, Edwin
Ellis, John
Jenkins, Hugh (Putney)


Brown, Hugh D. (G'gow, Provan)
Evans, Albert (Islington, S.W.)
Jenkins, Rt. Hn. Roy (Stechford)


Brown,Bob(N'c'tle-upon-Tyne, W.)
Faulds, Andrew
Johnson, Carol (Lewisham, S.)


Buchanan, Richard (G'gow, Sp'burn)
Finch, Harold
Johnston, Russell (Inverness)


Butler, Herbert (Hackney, C.)
Fletcher, Raymond (Ilkeston)
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)


Callaghan, Rt. Hn. James
Fletcher, Ted (Darlington)
Judd, Frank


Cant, R. B.
Floud, Bernard
Kelley, Richard


Carmichael, Neil
Foley, Maurice
Kenyon, Clifford


Carter-Jones, Lewis
Forrester, John
Lee, John (Reading)


Castle, Rt. Hn. Barbara
Fowler, Gerry
Lestor, Miss Joan


Chapman, Donald
Gardner, A. J.
Lever, L. M. (Ardwick)


Coe, Denis
Gregory, Arnold
Lomas, Kenneth


Coleman, Donald
Griffiths, Rt. Hn. James (Llanelly)
Luard, Evan


Concannon, J. D.
Griffiths, Will (Exchange)
Lubbock, Eric


Conlan, Bernard
Grimond, Rt. Hn. J.
Lyon, Alexander W. (York)



Hale, Leslie (Oldham, W.)
Lyons, Edward (Bradford, E.)




Mabon, Dr. J. Dickson
Owen, Dr. David (Plymouth, S'tn)
Steele, Thomas (Dunbartonshire, W.)


McBride, Neil
Paget, R. T.
Stonehouse, John


MacColl, James
Pannell, Rt. Hn. Charles
Swingler, Stephen


MacDermot, Niall
Pardoe, J.
Symonds, J. B.


Macdonald, A. H.
Pearson, Arthur (Pontypridd)
Thomas, Iorwerth (Rhondda, W.)


McGuire, Michael
Peart, Rt. Fin. Fred
Tuck, Raphael


Mackenzie,Alasdair(Ross&Crom'ty)
Pentland, Norman
Varley, Eric G.


Mackenzie, Gregor (Rutherglen)
Perry, Ernest G. (Battersea, S.)
Wainwright, Edwin (Deanne Valley)


Mackie, John
Perry, George H. (Nottingham, S.)
Wainwright, Richard (Colne Valley)


Maclennan, Robert
Price, Thomas (Westhoughton)
Walden, Brian (All Saints)


McNamara, J. Kevin
Price, William (Rugby)
Walker, Harold (Doncaster)


MacPherson, Malcolm
Probert, Arthur
Wallace, George


Mahon, Peter (Preston, S.)
Rankin, John
Watkins, David (Consett)


Mahon, Simon (Bootle)
Richard, Ivor
Wellbeloved, James


Mapp, Charles
Roberts, Gwilym (Bedfordshire, S.)
Whitaker, Ben


Marquand, David
Robinson, W. O. J. (Walth'stow, E.)
White, Mrs. Eirene


Mellish, Robert
Rose, Paul
Whitlock, William


Mendelson, J. J.
Ross, Rt. Hn. William
Willey, Rt. Hn. Frederick


Millan, Bruce
Rowland, Christopher (Meriden)
Williams, Alan (Swansea, W.)


Miller, Dr. M. S.
Rowlands, E. (Cardiff, N.)
Williams, Alan Lee (Hornchurch)


Mitchell, R. C. (S'th'pton, Test)
Ryan, John
Williams, Clifford (Abertillery)


Morgan, Elysian (Cardiganshire)
Sheldon, Robert
Willis, George (Edinburgh, E.)


Murray, Albert
Shore, Peter (Stepney)
Winnick, David


Noel-Baker,Rt.Hn.Philip(Derby,S.)
Silverman, Sydney (Nelson)
Winstanley, Dr. M. P.


Oakes, Gordon
Slater, Joseph



Ogden, Eric
Small, William
TELLERS FOR THE NOES:


O'Malley, Brian
Spriggs, Leslie
Mr. Lawson and Mr. Harper.


Oswald, Thomas
Steel, David (Roxburgh)

7.15 p.m.

Mr. Iain Macleod: I beg to move Amendment No. 129, in page 13, line 3, to leave out subsection (4).
My hon. Friend the Member for Shipley (Mr. Hirst) said on Second Reading that he found this subsection entirely incomprehensible, and I dare say that that is why he has added his name to mine to the Amendment to delete it. This is a probing Amendment. I think that the subsection concerns itself with what we can call "any to come" bets.
The proposition which it puts forward is that if one makes a bet, a single or Double or triple bet, or an accumulator, in which the succession of events is automatic, only one lot of duty is levied, leaving out the hedging point with which we have dealt. When the winnings are hazarded on other contingencies, that is say, if someone bets £1 on horse A, any to come, £2 on horse B, if he wins on the first, in effect he is subsequently Petting with the bookmaker's money and understand that it is proposed to levy tax on those additional any to come bets at each series of a man's instructions to s bookie.
I do not propose to invite the Committee to divide on the Amendment, but what concerns me is that this is the small man's favourite type of bet. He likes it very much and sometimes the stakes are amazingly small—6d. on something, any to come on something else. The "bookies" do not like it. Working out 6d. any to come on a 13 to 8 dead-heat is not a very easy calculation.
Might it not be—I put it no higher than that—that if the Financial Secretary insists on the new duty at every stage of these bets, which are basically the small man's bets, introducing this complexity at every leg of the transaction, the bookmakers who already find these bets fairly tiresome will prohibit them in the "bookies'" rules? If that happened may it not be that the Financial Secretary gets less money than he had bargained for and an entirely harmless activity of the small bettor would be curtailed? I simply raise this as a probing Amendment to say that I see some danger in subsection (4) in that a method of betting which seems to be entirely harmless may be prohibited by bookmakers' rules.

Mr. MacDermot: I remember the strictures of the hon. Gentleman the Member for Shipley (Mr. Hirst) about the wording of this subsection. I did not agree with him because I thought that this was a singularly clear subsection. I am sure that its purport has now been clearly explained to him by the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod), as he has explained it to the Committee.
There is a clear distinction between multiple bets which are true accumulators, such as the double and treble variety, and those which are of the any-to-come variety. This distinction should be reflected in their liability to the duty. Under the true accumulator the whole


of the winnings on the first leg of the bet must be restaked and the result is that there can only be a pay-out on one win—the final win in the double, treble or whatever the series may be, although the earlier wins are a precondition for payment.
On these other multiple bets the punter is liable to win something at each stage, irrespective of what happens subsequently. He can have winnings paid out on each leg of the bet, and he is only restaking, usually, part of his winnings on the earlier legs. It is, therefore, right to regard it as what it is, a separate bet for subsequent stages of such a transaction.
I would not agree that a punter is betting with the bookmaker's money. He is betting with his own money, held to his account by the bookmaker, and this is a reason why we have made this discrimination. It is also necessary for a Bill of this kind to lay down a quite clear definition of what is meant by a bet. We could define it so that this kind of bet was regarded as one bet but we did not. The whole Committee will agree, I think, that a clear definition is needed, otherwise there will be endless cases, no doubt in time wending their way to the House of Lords to decide whether or not an "up and down," a "double stakes about," "rounders" and the rest of them were one bet or many bets.
If we had not done this it would reduce the yield, but it would also provide a large loophole for evasion by credit bookmakers. Obviously, they would have an opportunity to present a considerable amount of their business as comprising mainly any-to-come bets when they were not of that kind. This would considerably weaken the control.
The right hon. Gentleman asked me whether we thought that the effect of this would be to make bookmakers more reluctant to agree to take this kind of bet. I should have thought that this is unlikely. I have taken the trouble to work out what the liability to the duty would be on many of these accumulator type of bets. The liability of the bookmaker was not very great. It would depend in each case of course what happens during the earlier legs. If there is only the first leg, the bookmaker only pays out on

the first stage. Even if one follows it through, I do not think that the liability for duty on the punter's stakes would be such as to be likely to lead to the abolition of this kind of betting.
I will not weary the Committee with long details. I see that the hon. Member for Worcester (Mr. Peter Walker) looks surprised. Perhaps he wants me to repeat some of my performances of last year. I can assure the right hon. Gentleman that I will gladly go into the figures with him afterwards, if he so wishes.

Mr. Iain Macleod: Frankly, I am not convinced, but in the interests of brevity I am prepared to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. Iain Macleod: I think that we should have a short debate on the Clause before we part from it, largely for the reasons that I gave earlier—because this is a new tax and because the House of Commons once made a most serious mistake, which we are anxious not to repeat.
I would like to make one point clear about the money to be raised. I am not suggesting that the Chancellor should raise less money than the El 1 million proposed. As the Financial Secretary knows, there are two other methods which I prefer to the ones which he has adopted.
My attitude now is the attitude of the Permanent Secretary who said to his Minister, "Minister, if you must do this darned silly thing, at least do not do it in this darned silly way." It is to this end that we have been bending our efforts during the afternoon. I hope that the Chancellor will look at this again. I would far rather he took a slightly higher percentage: three, for various reasons, would be extremely awkward to calculate, but 3⅓ would not. I would rather that he took 3⅓ and conceded some of the points on hedging bets and any to come bets, and so on, which we have been putting in front of the Committee, with some occasional sympathy at least from his side of the Committee.
I am not arguing about the amount of money that could be raised. One thing which we have learned in recent years


is that in what I call loosely the field of personal and social behaviour we have often ended up, as a result of legislation, with a result utterly different from that which, in all goodwill, we intended. Both sides of the House are guilty in this. I remember that Mr. Winston Churchill, as he then was, said when he introduced this tax in 1926, that he was not looking for trouble, he was looking for revenue. I understand that to be the attitude of the present Chancellor, and that is fair enough.
I also remember the phrase that Mr. Churchill used when the tax failed. He said that it had failed because of the volatile and elusive nature of the betting population. Even with betting shops and the results of legalised betting, I do not think that the elusive and volatile nature of the betting population has changed all that much in these 40 years.
We have had an extremely good discussion and this is an expression of my own personal philosophy in this subject. I like as few rules as possible in the sphere of personal and social behaviour. In general, I am an abolitionist of censorship and almost everything else, but I am very conscious that when we have dealt with things like gaming, and sometimes when we have dealt with things like Sunday observance and the Street Offences Act, we have legislated with great solemnity in the House and ended up, because of human nature in all its various forms, with quite a different end product.
I want to spend a couple of minutes saying why I think the Chancellor is wrong. I do not think that he is wrong to tax gaming; I think that gaming should be taxed very heavily indeed, and more severely than the Chancellor proposes. Thus, money does not come into the argument. I am much less convinced about a tax on betting. Attendances at the racecourses have been decreasing and there is little doubt that a tax on that form of betting, unless it is devised in such a way that it is acceptable by the people at large, as the 1926–1929 taxation was not, may, as always happens to a tax held in ill-regard by people, open up once more, in a very different way, the door to illegal and what I might call amateur practices.
It is worth glancing back 40 years. Mr. Churchill estimated that the yield from

the tax would be £6 million. In fact, it operated only in two complete years. In 1927–28, he got £21 million and in 1928–29 he got £21 million. This was little more than one-third of what he was budgeting for. The costs of collection were admittedly very high. Just how high they were has not been revealed, as far as I know, which makes me suspect that they were very high indeed. The Commissioners of Customs and Excise were extremely "cagey" about this matter in their evidence to the Royal Commission in 1950. They said that, apart from a large staff of their own, they had 19 ex-police officers carrying out their duties on the course and 200 operating off the course.
One of the consequences of the Government's proposal is that the Customs and Excise will—I make no complaint about this; it will be part of its duty, but not a particularly attractive part—act as agent provocateur. It happens this way in Ireland. If the Financial Secretary will consult last month's issue of a publication called "The Licensed Bookmaker" he will find an account of how it is done there.

7.30 p.m.

Mr. MacDermot: I think that the difference between the right hon. Gentleman and I is purely one of terminology. "Agent provocateur" has a specific meaning, which is that the agent is seeking to provoke someone to break the law. That is an entirely different thing from a test bet.

Mr. Macleod: I apologise. It was not the right phrase to use. I meant that test bets will be put in one way or another through the bookmaker's account, either on their own behalf or they will get somebody to do it. "Agent provocateur" was a loose form of words. I did not mean the phrase in that sense. I have a great admiration for the Customs and Excise officials. I will simply regard it as their duty in carrying out the provisions of the Clause.
There was a failure of intent by Parliament 40 years ago. I have given the yield, which was dramatically different from the estimates made. Since then, every Chancellor of the Exchequer has looked longingly almost every year at betting to see whether he could draw something from it. Perhaps the new


incidence of casino gaming and, in particular, the introduction of the betting shop were the things which made the present Chancellor of the Exchequer decide that it was opportune to do something about the matter. I do not deny that it may be opportune, but I have consistently argued—and perhaps I may be forgiven for making this point again—an entirely different case from the one which the Bookmakers' Protection Association wished to argue.
I have consistently argued that the method selected by the Government is the worst possible method. I believe that it will encourage illegal betting. The argument that the position has changed because of betting shops and licensed betting offices ignores the fact that the real danger of evasion of duty lies not with the licensed bookmaker, for whom it would rightly mean the loss of his permit, but with the amateur bookmaker, operating without a permit, who operates to the detriment of racing. There is already difficulty in collecting the appropriate amounts for the levy, and I cannot but think that this tax will make it worse.
As is well known, my first method would mean rewriting the whole of this part of the Bill and, therefore, it is not a right method to adopt. We have left our other proposal on the Notice Paper to indicate that we would prefer a simpler method, which is the method on returns. This is outside the terms of the Budget Resolution and, therefore, cannot be discussed except in passing.
I am grateful to the Financial Secretary for the extremely clear answers he has given on this Clause and the way in which he has dealt with the points we have raised. I remain convinced that the Government have not done the wrong thing in taxing betting, but selected the worst possible method which will do damage to racing. We shall make 40 years afterwards the mistake which was made in 1926. Therefore, I advise my right hon. and hon. Friends to oppose the Clause.

Sir S. McAdden: I find myself in a difficult position. We are discussing whether Clause 11 should stand part of the Bill. The Clause is entitled "General betting duty", which I have been in favour of for a very long time.

Sir G. Nabarro: Hear, hear.

Sir S. McAdden: My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) rightly said that he and I joined forces together on several occasions in the past in favour of a general betting duty. Where I part company from him is that I never joined him in his advocacy of a turnover tax on betting. That was his own suggestion. I did not join him in it. But I supported the idea of a general betting duty.
My support for the idea of a general betting duty does not mean that I have necessarily got to give support to any particular form of betting duty. It is this particular form of betting duty with which I disagree. I am fortified in my disagreement by the fact that, together with my hon. Friend the Member for the City of Chester (Mr. Temple), I served on the Committee on the Betting and Gaming Bill and listened to assurances given by Conservative Ministers, although, of course, on the advice of those whose duty it was to advise them, that under the terms of that Bill it would be impossible for commercial gaming and casinos to operate. But in fact they have done so.
This leads me to cast doubt on whether the assurances on which the Financial Secretary, I am sure honestly, relies will be borne out in the light of experience and to wonder whether my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) is nearer the truth when he says that, in spite of all these protestations and assurances, we will bring in a considerable evil by reintroducing illegal betting in order to escape what is being proposed in the Clause which is against the best interests of the community.
I repeat that I am entirely in favour of a general betting duty which is sensibly and properly applied on the lines advocated by my right hon. Friend the Member for Enfield, West. I am sure that he is right. This is not a matter of party political faith. All of us have views about how betting should be taxed. But, irrespective of on which side of the Committee we sit, if we feel that this method is wrong—and I sincerely believe that it is—we should argue and vote against it. I hope that when the time comes my hon. Friends and hon. Members opposite, if they share the views which we hold, will take the line that we must have a general


betting duty but that this is the wrong form of betting duty.
When we were considering the Betting and Gaming Bill some years ago, many hon. Members said that they knew nothing about betting and gaming but proceeded to advise the Committee on how it should conduct its affairs. The results of that experience should deter us a little. If we have in this Committee people who know a little bit about the matter, should not we be guided by their practical experience? I do not doubt that the Customs and Excise have had long and protracted negotiations with, and made inquiries of, bodies interested in betting and gaming. Nevertheless, it sometimes happens that those of us who are not involved in the technical side of it know a little about the practical side of it.

Mr. J. T. Price: The hon. Gentleman is rather trailing his coat, because I happened to be a member of the Betting and Gaming Committee in 1957 myself, with the hon. Gentleman. It is quite true that many of us who had serious doubts on moral grounds about the issues involved made strong protestations and voted against many of the proposals of the Government of the day. It is not right to suggest that because some of us who were not exactly naive but never claimed any professional knowledge of gaming made those criticisms the expert knowledge on which the Bill was based was entirely wrong. The evils of casinos and similar establishments were the result of bad technical advice tendered to the Government of the day and the action of the Conservative Government in accepting it.

Sir S. McAdden: The hon. Gentleman has misunderstood me. I am not attacking him at all. I remember distinctly how on many occasions he voted against proposals in that Bill, as I did myself.
This is not a matter of party faith. If one is convinced, as I am, that it is the wrong way to do it, we ought to examine it more carfully before enshrining it in an Act which may involve us in a repetition of some of the evils which have occurred in earlier gaming and betting legislation. I hope that my hon. Friends will vote against the Clause, not against a general betting duty, but against the

way that it is proposed to be levied under the Clause.

Mr. Bessell: Some hon. Members may recall that I moved an Amendment to the Finance Bill last year on behalf of myself and my right hon. and hon. Friends which sought to include a betting tax in the section on the Capital Gains Tax. Perhaps rightly, that method of
taxing gambling was rejected by the Government. On reflection I feel the system which we suggested might have been cumbersome, and I am satisfied that the method proposed in Clause 11 is the best compromise we are likely to get. Therefore, on behalf of those of us who sit on this bench, I welcome the Clause.
I should have liked very much to have had the opportunity of taking up some of the points raised last year by the hon. Member for Manchester, Cheetham (Mr. Harold Lever), who, unfortunately, is not in his place. As I have not given him notice, I cannot very well challenge him on them. He, like a number of hon. Members on the Government benches and a great many hon. Members on this side of the Committee on the Conservative benches, rejected the principle of a gambling tax with considerable force.
I recall that I and my right hon. and hon. Friends on this bench were held to ridicule for suggesting that it was a proper kind of tax to be imposed by the Government. When the learned Solicitor-General replied to me, he pointed out that a tax on gambling would be very difficult because no provision would be made for losses. He said:
Apparently, this caused the hon. Member for Bodmin no difficulty. He said that no allowance would be made for losses. That, I submit, would be a rather novel principle to introduce into our tax law. We cannot take account of gains, but take no account of losses."—[OFFICIAL REPORT, 27th May, 1965: Vol. 713, c. 901.]
In the present proposals of the Government, I have been unable to discover that there is any provision for relief in the case of losses. I wish that the learned Solicitor-General were here, because I would like to remind him of some words of his father, the late Isaac Foot, who once represented the Bodmin constituency in the House. They were:
The Labour Party: leave them alone, and they'll come home, bringing their tails behind them.
I am glad to see that they have once more learned wisdom from the Liberals.
It would be right and fair to add that the Committee, the House of Commons and the country owe a very special debt to the hon. Member for Worcestershire, South (Sir G. Nabarro). I was hoping that he might have been called before I was, because I hoped that he would not quote in full the speech which he made here in April, 1963. I should have liked to have the opportunity of quoting some of the parts of it which he may omit. He has pioneered the question of a gambling tax, and I am sure that he has not only had the support of many people in the House of Commons, but that of a very wide and representative body of public opinion throughout the nation.
7.45 p.m.
It has always seemed to me incredible that, while of necessity we must tax many vital goods and services in order that the Exchequer shall obtain the revenue to provide the nation with the Government services which are essential to its smooth conduct, gambling should almost entirely escape any form of taxation. I know that the last Conservative Government made a stab at it, but it was not a sufficiently effective one.
The measure proposed under Clause 11 is a real step forward and one which will be welcomed, even though it will be unpopular in some quarters. Where it is unpopular, the people concerned are not particularly relevant. In the last analysis, we are concerned as a nation that there shall be equity in taxation, and we are concerned as a Committee of the House of Commons that the Finance Bill shall provide as much equity as possible. I cannot believe that we can continue to ignore the amount of money which is spent on gambling each year and not seek to find some way whereby the Treasury and the nation as a whole may benefit. Anyone who suggest otherwise is irresponsible and, more than that, it is something which would be condemned by any fair-minded or sensible person.
The right hon. Member for Enfield, West (Mr. Iain Macleod), who has shown an expertise on the subject which has left most of us gasping with admiration, seemed to cast some doubt on the figures which are provided by the Churches Council on Gambling. I am at a loss to understand why he should do that. After all, the Council concerned is not an

ad hoc body. It is regarded by
most authorities as a responsible body. It has gone to an enormous amount of trouble to provide accurate figures, and it has always sought to understate its case. There is no instance of any of its annual reports giving a figure which it believes to be the full amount. It always cuts it down as far as it is able to, and it usually adds a footnote, as it did in its Report for 1965, to the effect that the turnover may be considerably in excess of the figure which it quotes.
The figure which it quotes for 1965 is £915 million, and, unless the right hon. Gentleman can produce conclusive evidence that that figure is erroneous or deceptive, then we can do no better as a Committee than accept it and work on that basis.
Assuming for a moment that the right hon. Gentleman is right and that the figure is substantially less, what is the figure? Let us suppose it is as low as £100 million. We know that it is substantially more, but it would still be quite wrong that even that figure, spent on gambling,
should be ignored by the Exchequer for purposes of taxation. Therefore, I am certain that the Government have taken a correct step on this occasion and have introduced a Clause to the Finance Bill which can be only equitable and fair.
I have some slight reservations on the Clause itself. I had not sought to intervene on the Amendments—there has not been an appropriate one for the purpose—but I ask the Financial Secretary to look carefully at the Clause and to see whether he agrees with me that there could be a danger of the small bookmaker suffering to the benefit of the large combines and the larger bookmaking institutions and companies. This is important, not because I have any vested interest in the profession of bookmaking—I hasten to add that, otherwise my Nonconformist vote in Bodmin will have gone for ever—but because I believe that in fairness we should consider the position of the small man in relation to the large company.
It has been suggested to me that the Clause may provide favourably for the larger bookmaker and cause difficulties to the smaller bookmaker. I will not elaborate on that or waste time by further explanation, but I should like an


assurance from the Financial Secretary that he will consider the Clause in regard to that consideration. Perhaps we may hear from him further about that and, if necessary, possibly the hon. and learned Gentleman will undertake to introduce an Amendment before Report.
We on this bench give a cordial welcome to the Clause. We do not give it on the grounds which it was suggested last year were behind our Amendment on the Capital Gains Tax Clauses in the 1965 Finance Bill, namely, that the Liberal Party views all matters of this sort from the somewhat narrow confines of its Nonconformist conscience.
As for my right hon. and hon. Friends on this bench, I think I am right in saying that my hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) is the only hon. Member apart from myself who would claim a close link with our Nonconformist Churches. Therefore, the Liberal Party in the House of Commons today is more representative than perhaps it once was of all sides of opinion.
We welcome the Clause, not on any moral grounds, not on any particularly narrow, grounds of religious belief, but because we feel that it is wholly wrong that in a country which is heavily taxed, as indeed it must be, where people are having to expend a great deal of their earnings in taxation of one form or another, the punter, however innocent or otherwise his sport might be, should not be equally subject to some form of taxation which will be of benefit to the nation as a whole. We from this bench give a cordial welcome to the Clause.

Mr. J. T. Price: Since I felt constrained a few moments ago to make a short comment while the hon. Member for Southend, East (Sir S. McAdden) was speaking, perhaps I might be allowed for a few moments to expand my feelings about this matter without unduly wasting the time of the Committee.
I took an active part in our betting and gaming debates nine years or so ago and I was all the time in opposition to this kind of thing, not only on grounds of practicability, but on moral and ethical principles, also, on which I hold particularly strong views.
I do not hold those views in the belief that Parliament, by fiscal or legislative measures, can prevent the passion for gambling which is so prevalent in our society—I am not as foolish or naive as to suppose that we can do that—but I think seriously that in bringing forward this proposal, with whatever defects might be revealed in critical discussion, the Government are beginning to take an interest in this subject in a practical way which may have fiscal benefit for the nation.
I can never understand the line of argument which puts forward the thesis that because gambling is a particularly difficult and intricate business, a sort of mysterious world inhabited by bookmakers and professional backers and punters, the State should throw up its hands in despair and refuse to tax it at all.
I was grateful to the right hon. Member for Enfield, West (Mr. Iain Macleod), who spoke critically about the Clause, for at least acknowledging from the Opposition Front Bench that in the present economic state of the country we in the House of Commons are entitled to require the tremendous revenue which is produced in betting and gaming to make a contribution to the revenues of the State. In that, I strongly support my right hon. Friends who have brought forward this proposal.
My astonishment is not in the principle itself, but in the very modesty of the proposal. When one considers the tremendous revenues which are already raised from the orthodox sources of revenue—spirits. wines, tobacco and all the other things which are to a large extent wholly occupied by the needs of the Revenue—and compares this proposal of 2½ per cent. on a business which, on some estimates, which have been challenged by the right hon. Member for Enfield, West, produces £900 million a year, I am astonished that my right hon. Friends at the Treasury have made this very modest proposal of 2½ per cent.

Mr. St. John-Stevas: I fully appreciate the force of that argument. Would not the hon. Member agree, however, that there is a grave danger from the viewpoint which he is arguing that this tax gives the


Treasury a vested interest in the continuance of gambling and that if one considers the experience with the tobacco tax the Treasury could not get on without it, whatever may be proved about the effect of tobacco on health? Is this not a serious danger which should be considered when supporting this new tax?

Mr. Price: Yes; I appreciate the point. It is a valid argument. It applies with even greater force to the proposals of the French Parliament when, some years ago, it levied a tax on the maison tolerée. One might say that something which is frowned upon or disapproved by certain members of our society on moral, religious or ethical grounds, might involve the State in a shareholding in that particular form of vice as it appears to certain people.
I am not quite as simple as that. Many people hold particularly strong views about the evils of drink, for example—and the evils of strong drink are patent to everybody who likes to look at the state of the country today, particularly the excessive use of strong drink. But if, since many people hold those views, revenue were to be lost because we abolished the tax on strong drink, all the virtuous people who hold the extreme view that the State should gain no benefit from these evils would have to pay possibly double the amount of Income Tax which they are paying today. This, therefore, is a difficult line of country, but I accept the point made by the hon. Member.
I do not want to develop this matter unduly except, perhaps, to refer legitimately to the point raised by the right hon. Member for Enfield, West. The right hon. Member said that if this tax was ineffective, if its machinery was inadequate to deal with the collection which is envisaged by the Clause, a good deal of betting which is now legitimately permitted under the law through betting offices and licensed bookmakers might go underground. That is a valid argument and I accept it.
I was in the House of Commons when we had the long debates on the Street Offences Bill, when the point was raised from various parts of the House that prostitution would be driven underground. That has happened. This
is known to every social observer
of any

competence since the Bill was passed. That is what may be happening with betting. In many of the clubs which we, in our unwisdom, have by legislation licensed, we have provided not only an anti-social instrument in the hands of people who operate it for commercial gain, but also a refuge for the people who previously operated prostitution on the streets when it has now gone underground.
8.0 p.m.
I mention this, I hope, with due regard to the needs of the Treasury to raise new revenue. Nevertheless, the first thing that ought to be apparent to the Committee in settling this matter as a basis for future taxation of a much heavier rate than anything envisaged in the Bill is that if we are to proceed with this, we do so on the assumption that if the Treasury, in its wisdom and on competent professional advice and after adequate debate in Parliament, has decided to adopt a certain line of legislation and to levy a tax of 2½ per cent. on bookmakers, it is not the business of the House of Commons to advise the bookmakers how to meet that requirement.
If the Chancellor decides to increase my Income Tax—I hypothecate myself as a suitable instance—by 1 s. in the £, or some other figure, the Treasury does not advise me how I readjust my personal affairs to meet the new liability which I have to meet. It is quite superfluous for the House of Commons, and for the Financial Secretary, in particular, who has addressed the Committee with great charm for the last couple of hours about these intricate matters, to spend our time here discussing all kinds of alternative means by which the bookmakers may be entitled or empowered to meet their liabilities. That is a matter for them.
I approach this question quite rationally and not unreasonably. I want there to be reasonable equity in it. It is, however, surely no business of this Committee to tell the bookmakers how they will provide 2½ per cent. on turnover or some other notional figure. They will adjust their busines all right. They have done so in the past. Taxes are already levelled on certain forms of gambling.
Every time this matter comes before us, we are all, regardless of our party affiliations, completely engulfed by masses of propaganda poured out by public


relations officers and all kinds of inspired sources who tell us, and try to "frighten the daylight" out of us, how difficult and immoral it will be if we do this. That is what happens with a little, modest proposal for 2½ per cent. What would happen if the proposal were for 10 per cent., which, in relation to the tax on whisky, would still be very modest?
I am shocked and disturbed by the spectacle of my right hon. Friends, who have the advantage of professional advice in the Treasury and elsewhere in Government Departments, coming here and arguing for hours about how the bookmakers are to find this miserable 2½ per cent. Let Parliament decide to levy this tax and they will soon provide the machinery by which it can be done.

Mr. Bessell: I share the hon. Member's view that the amount of the proposed tax is too little. Would not the hon. Gentleman agree that the proposal made in 1963 by the hon. Member for Worcestershire, South (Sir G. Nabarro) was a very sensible one, namely, 2d. in the Is.?

Mr. Price: That might be a simpler way of doing it—I do not know. However, the hon. Member for Worcestershire, South (Sir G. Nabarro) is quite capable of looking after himself, without any special pleading from me.

Sir G. Nabarro: Sir G. Nabarro rose——

Mr. Price: I have not given way yet, but will do so presently.

Sir G. Nabarro: The hon. Member should not speak too long.

Mr. Price: The hon. Member must not presume too much upon my good nature. He must not stand up automatically and think that I shall sit down immediately. In any event, I have nearly finished.
I support this tax although I consider it inadequate. If any of my constituents complain to me about my having supported it I think that I know how I will deal with the matter. I will certainly not run away from their complaints or apologise for the support I have given this tax. I wish that it were larger. I hope that it will not drive this form of activity underground. If the hon. Member for Worcestershire, South now wishes to intervene I will allow him to do so.

Sir G. Nabarro: The hon. Gentleman may finish his speech first.

The Chairman: Mr. Rees-Davies.

Sir G. Nabarro: I have missed my opportunity again.

Mr. Rees-Davies: I feel inclined to resume my seat right away, particularly when I see the attractive carnation being worn by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) who, I have no doubt, will he fortunate enough to catch your eye later, Sir Eric.
I shall be brief. My main object is to persuade the Government to look at this whole matter again. It really boils down to another saying of Mark Twain, to whom I referred earlier this afternoon. I recall that he gave the advice to statesmen that they should concern themselves with administration and get that right and not concern themselves with the moral principles of the matter.
The Committee has accepted that there shall be a betting tax. The hon. Member for Westhoughton (Mr. J. T. Price) rightly said that for a long time the whole House has been agreed that there should be such a tax. My hon. Friend, who was then the hon. Member for Kidderminster, put forward a turnover tax and it is now three years since I advocated to my right hon. Friend the Member for Barnet (Mr. Maudling) at the Treasury, in all its glory at the time, that there should be a betting office licence tax, a tax related to telephones and a pitch tax.
All those methods having been suggested but nobody has yet satisfactorily said why we cannot have a betting office licence—which the Sporting Life has made plain would be acceptable to the bookmakers—at say, £30 a week, a tax which would not cost a penny to collect. I have not yet heard how much that would provide to the Revenue. If every betting office licence paid £1,500 a year basic, what would that be worth to the Government? That is not to say that the bigger betting offices would not pay more if, say, their rateable values were higher, or if some other arrangement applied.
It is plain that every S.P. office depends on its telephones. The number of telephones will tell one the nature of the business of the premises. Therefore, if one introduced a tax on those telephones


the resultant money could be collected without the difficulties and dangers to which I shall refer.
It is no good saying that the Government's proposals are just as good in practice. It is true that horse racing is different from dog racing and that Folkestone racecourse is different from Ascot racecourse. But if the Revenue goes as an ordinary individual to a racecourse manager and says, "We expect to receive from Ascot so many thousands of pounds a day from the pitches and so many hundreds of pounds a day from Folkestone. You can then decide the value of the pitches in each ring", the money would then come to the Treasury without a penny being spent. The reason I am so definite in stating this is that all the dangers of doing otherwise would thus be avoided.
As I pointed out last May:
A tax of 2½ per cent. upon the stake money of every punter in this country will have a first effect of leading to substantial evasion, a great deal of crime and growing illegal betting. The purpose for which the tax is introduced on betting will be set aside. Furthermore, the tax system is impracticable because the bookmakers who are not honest—and some of them are not—will not only evade the tax but will put the punter's money to their own benefit. The great majority of bookmakers who are perfectly honest, will pay the tax. Thus, those who are dishonest will reap the benefit of their dishonesty."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1480.]
I believe that, in the end, the Commissioners of Inland Revenue will go to the major bookmakers and make a provisional assessment of what they expect to get from them. That will have to be guesswork, because nobody will collect the small amounts on the course. I was right when I gave the example that the average bet of £1 will mean the punter being paid out his winnings on 19s. 6d. This shows that the Government's system will not work. It will not pay, because it will be impossible to collect. There will be a provisional assessment on anticipated turnover.
It will be seen that this is grossly unfair because the Bill states that a 2½ per cent. tax shall be collected on the stakes. We will, therefore, be setting into motion an Act of Parliament which will not be truthfully and faithfully interpreted, and that is bad from the point

of view of the law, and it is undesirable to build up a practice of that sort.

Mr. J. T. Price: In saying that, the hon. Gentleman is really going back to the situation which existed before the Betting and Gaming Act was passed, when there was a great deal of undercover betting. Was it not a fact that the practice of the Treasury was to make an arbitrary assessment of bookmakers' takings and saying, "If you do not accept this assessment of £10,000 a year or, whatever the sum might be, you must produce your books to show that it is wrong." Was that a bad principle or would the hon. Gentleman consider that it should apply to the present situation?

Mr. Rees-Davies: It is correct to say that illegal street bookmakers paid Income Tax. They were assessed on the anticipated turnover of their illegal moneys. I always thought that that system was grossly unsatisfactory. When one provides in an Act that the Exchequer will collect a punters' tax—because that is what it is—it is wrong that it should end up in the way the hon. Gentleman described, and that is what will happen in the end.
To begin with, there will have to be substantial staff increases in the Customs. Has an estimate been made of the additional staff which will be required? Have the Government realised that on the course and within betting offices throughout the country these provisions will have to be supervised? And what about the duties of the police? Will this be carried out entirely by the Customs, or will the Home Office enter into the picture? That Department will have to come into it because the real, final deterrent is the loss of the betting office licence. When it reaches that stage the Customs will have to go to the police.
Frankly, I do not believe that the House of Commons wants the police to be involved in the enforcement of betting duties once more, remembering the trouble we went to to cure the situation on the last occasion. In this connection, what about the strike off? Will we be faced with proceedings to strike off bookmakers in our efforts to ensure that they pay the duty?
One can have a turnover tax, a tax on winnings or whatever else might


be suggested. But, whatever system one uses, one must end up with exactly what the Royal Commission said in its 1951 Report: that the estimate on the yield proved to be false, that the cost to the Administration proved to be much higher than was thought to be the case and that the system brought about illegal betting and set up amateur bookmakers. That happened before. Do not let us allow it to happen again.
8.15 p.m.
There are some hon. Members who have not inconsiderable experience in this sphere. It is from that experience that we are giving advice to the Government which we hope will guide them. I hope that between now and Report they will consider the immediate introduction of a straightforward tax from the pitch point of view, for the cash betting office. We have not tabled Amendments to this effect because such amendments are not easy to draft. The Treasury should realise that, whether or not this year the same amount of revenue would be raised, such a system would work and the Revenue would be bound to get its money immediately.
It would be much easier to call on the racecourse authorities and betting fraternity to pay a flat-rate tax, which would not cause all the difficulties I have described, than to institute a tax similar to the 1926 one in the hope that, by the powers of enforcement, the Government will he able to get away with it. They may, but it is unlikely that they will. Far better for them to use a simpler method, an easier method, one which is easier to enforce, easy to collect and which my hon. Friends and I would infinitely prefer.

Mr. Frederic Harris: I will follow the lead of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) and be brief because I realise that we must make progress with the Bill. I have always supported the idea of a betting tax. It may seem amazing from my point of view—and I say that with a certain amount of vested interest because like so many people, I like to have a bet from time to time—that I fully recognise that the Government should receive a tax from betting. I have never disputed that.
The proposal as put forward is completely unworkable and I go a long way in supporting my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies). Had a tax of some form been devised based on winnings—or, better still, on operating sites—that would have been acceptable and, as my hon. Friend the Member for the Isle of Thanet pointed out, easy to administer. Hardly any cost and very little staff would have been involved. However the Government's suggestion is extremely bad.
The proposed system adds to a problem which I have raised from time to time, namely, the additional complexities which are constantly being introduced into our muddled taxation system. The Government's latest proposals will be no easy tax to administer. It is bound to add to the development of illegal betting and we should not accept that. It will undoubtedly hit the small bookmaker. The Financial Secretary admitted that in his remarks.

Mr. MacDermot: Mr. MacDermot indicated dissent.

Mr. Harris: The hon. and learned Gentleman may not think he did but when he reads his remarks in the OFFICIAL REPORT he will find that that is what he suggested. There is little doubt that it will hit the small bookmaker and if we accept, as we do, that bookmakers should be allowed to live and exist, we should treat all on the same fair basis.
The Government have virtually taken the line that they must have 2½ per cent. from all betting turnover, as we understand it today, and that it is up to the bookmakers to find a method of meeting that requirement. Irrespective of what the Government have said on this issue, that is an unsatisfactory way of trying to achieve their aims. It seems wrong to propose a scheme which will, in effect, mean that the genuine payment of this tax will not be achieved—the factual results of this imposition will not be as the Government expect—because there will be so much guesswork involved all along the line.
It is extraordinary that in this discussion the Financial Secretary should time and again have made the point that the odds will be adjusted to meet the tax. His remarks show a lack of knowledge of how prices and odds are created at every race meeting. How he imagines


that odds will be adjusted to meet the tax, I do not understand. His views indicate that he would be a gift, so to speak, to the bookmakers because he just does not have any knowledge of what goes on behind the scenes.
I support a betting tax in general, and I have never failed to do that, but I am against this system, which I think is unworkable and unsatisfactory.

Mr. St. John-Stevas: I am glad to have the opportunity to take part in the debate on this most important Clause which introduces this new tax, which before today has virtually been undebated in the House. The discussion on the Budget earlier rightly centred on the absurdities, the inequalities, and the anomalies of the Selective Employment Tax.
The case for a betting tax is, I think, widely accepted in the House, and I would accept it, despite my own caveat which I entered earlier about the possible danger of establishing a vested interest by the State in this new source of revenue. This tax must be seriously considered, despite the gimmicky way in which it was first announced to the House. It was said at the time that it would in some way balance the charge for the scheme for mortgages, of which we have seen virtually nothing in the way of legislation.
The betting duty imposed by this Clause has to be assessed in the wider social setting of gambling and betting in Britain at the present time. Grave social implications are involved by this tax although it is, in the first place, a financial measure. I agree with those who have said that the Betting and Gaming Act of 1960 was in many respects an extremely unfortunate Act and that it brought about results quite the opposite to those which it was intended to bring about.
It has achieved an immense increase in betting and gambling of every kind. It was thought at the time that if we made betting and gambling respectable they would lose their glamour and attraction. But, alas, this is not the case, and directly following from that Act we have seen a spread of betting not only on the racing of animals, about which we have been talking this afternoon, but of betting on the results of General Elections, contests

for the leadership of the party opposite, and other similar events. We may eventually have betting on the contest for the leadership of the third party in the House.
I regard all this as deplorable.

Sir G. Nabarro: I do not. I won a lot of money on it.

Mr. St. John-Stevas: That gives me no reason to change my views. The only thing that we have been spared by the bookies is betting on the likelihood of devaluation, although gambling in that respect is carried on more subtly elsewhere.
The Nonconformist conscience has been mentioned earlier today and I am not qualified to speak for it, but the widespread anxiety about the extent of betting and gambling is not confined to the Free Churches which have always regarded gambling with a particular abhorrence. Those like myself who do not regard gambling as intrinsically evil but as something to be judged by the social circumstances of the time, and the personal circumstances of the person making the bet or taking the gamble, are also seriously concerned.
The introduction of this betting tax gave the Government a most important opportunity to introduce a tax which would, first, raise a substantial revenue, and, secondly, would reduce the incidence of gambling in the country. The criticism of the Clause is that it does nothing to achieve either of those objectives, and, far from making them easier of attainment, by the very fact of its existence, will make it more difficult to get the sort of tax which is needed.
It will raise very little revenue, and precisely because of that it will have only the most negligible effect on the amount of betting that is carried out. It is far too low a tax for that. The betting turnover is very large. It is estimated—and it may well be an optimistic estimate—that this tax will raise £11 million. This is a small sum in itself, but if it is put in the setting of consumer spending, which is £23,000 million a year, one sees what a fleabite it is.
In a recent article the Economist made an estimate of the amount of money involved in gambling. Stake money was estimated to be about £900 million—very similar to the estimate made by the Churches Council on Gambling. Actual


spending is in the region of £200 million, if one takes as one's figure the stake money minus winnings. If one adds the total estimated to be provided by this Clause, £11 million, to the £6 million revenue which it is estimated the other two Clauses will raise, one gets a total of only £17 million, which is a very small sum indeed.
But there are other objections to this tax. It is vitally important when introducing taxes that the tax itself should be reasonably easily gatherable, and there are two reasons why this one will not be. First, there is the obvious reason that it will be very difficult to assess.
I think that there is also a moral point which is relevant and which should be made, namely, that a tax should not be an invitation to evasion. The Treasury should not seek to create conditions under which, by the very nature of the tax, potential taxpayers are tempted to avoid it. This tax is an invitation to those people concerned to take every opportunity to dodge it. What the tax does by taxing turnover is creating endless opportunities for evasion. What the Chancellor and his team are doing—I hold them all responsible—is creating an occasion of sin for bookmakers. This turnover tax then is open to grave objections.
8.30 p.m.
Of course, any tax on betting can be objected to, but a tax on winnings would be open to much smaller objections. It would not be perfect, but it would be an improvement. There would be fewer transactions and bookmakers would have some incentive to keep accurate records. Already they need to keep records of winnings in order to return them to the Inland Revenue, for obvious purposes. Accordingly, conscience would be buttressed by a certain amount of self-interest——

Mr. Barnett: Does the hon. Gentleman not think that the type of person who would go in for the level of evasion he has mentioned would be equally likely to be evading his Income Tax as well?

Mr. St. John-Stevas: That might well be so, but if it is it does not dispose of my point. It rather strengthens it, because such a man might be so practised at evading Income Tax that when he came to this, which offers a much easier opportu-

nity of tax evasion, he would do it much more skilfully, being able to rely on his previous experience.
There are, I conclude, very serious objections to the Clause. The tax is too low, it is not enforceable, and it does nothing to reduce the incidence of gambling, which, in the opinion of many people who are not censorious by nature, is one of the gravest moral problems facing Britain at the present time.

Sir G. Nabarro: The only point in the speech of my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) with which I am completely in agreement is that the amount of the tax enshrined in this Clause is far too small. It ought to be 16⅔ per cent., or 2d. in the shilling. It should be 2d. in the shilling for ease of calculation and 16⅔ per cent., because that would bear a proper relation to the scale of sumptuary taxation in other spheres.
For example, of approximately £1,400 million spent annually on tobacco, £1,000 million is taken in taxation. I do not regard the use of tobacco as any greater evil than gambling. I indulge in both in strict moderation. There was a good deal of hilarity earlier about my betting on the leadership of the Tory Party. It was a very good thing to bet on. I thought that I knew better than most people who would win, and I was right. As I was not at the time a Member of the House, I did so with a clear conscience.
I bet occasionally, perhaps three or four times a year—a few shilling on a point-to-point and perhaps on the result of a by-election or something of that kind. I have no objection to people betting in moderation or to their drinking or smoking in moderation. I condemn none of these things as an evil or a vice, but I do say that gambling makes no contribution whatever to our national economy and our prosperity. It contributes not a jot or tittle to Britain's export trade and it ought to be the subject of high taxation. I have never shifted from this point of view.
My remarks fell on stony ground with successive Conservative Chancellors of the Exchequer, however. They would not listen to me. They advanced all sorts of arguments about the difficulties of doing it. I believed none of them. One


Chancellor, who shall remain unnamed, said that he could not devise a means of taxing the bets in a betting shop. I told him, straight to his face, not to be a fool and that I would show him how to do it. I sat in his office and showed him how to do it and he said, "Oh yes, I suppose that that might be possible." That was the end of it.
Of course it is possible. I said in 1963, and I want to read out to the Committee today what I said because it is exactly consistent and will demonstrate to my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) why I cannot vote with him tonight against this Clause. I said this:
I believe that the Chancellor this year should have taxed all gambling turnover—and I repeat, turnover If a man stakes a sum of money ten times over he should be taxed on it severally ten times over at 16⅔ per cent., or 2d. in the shilling. My right hon Friend is muttering. He does not like me saying this sort of thing. I do not like omissions in his Budget.

Mr. MAUDLING: I am trying to follow the mathematics of it. I should have thought that a tax of 10 per cent. imposed 16 times would make a tax of 160 per cent."
I replied:
Certainly in the aggregation, but I do not mind if it is a tax on turnover,…"—[OFFICIAL REPORT, 9th April, 1963; Vol. 675, c. 1162.]
which is what I consider it ought to be.
If a man buys ten tots of whisky and drinks them in succession he pays the whisky duty per tot ten times over. If the whisky duty, is at, say, 150 per cent., then if the Maudling argument is correct he is paying 1,500 per cent. But that is not correct. He is paying 150 per cent. severally ten times, and that is what I seek for betting. That is also what I am confident it will be within five years on betting.
This 2½ per cent. duty is only a beginning on what should be called a turnover tax on betting. It is economically and morally corect that we should do it. Whether it is precisely in its proper form in the present inaugural stage is arguable. I am certain that the tax on betting turnover is the proper way to do this, as opposed to the complicated system advanced by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), which was a tax on pitches, telephones and other fixed assets.
My right hon. Friend the Member for Enfield, West has cast doubt on the figures given for the total turnover on gambling. He says that the Churches' Council on Gambling is not a reliable estimate. I quoted the Churches' Council report, which I regard as tolerably reliable. My hon. Friend the Member for Chelmsford came to my aid in this matter, and I am delighted with him for doing so. He quoted the Economist, which put the aggregation of gambling turnover at £900 million approximately. The Churches' Council on Gambling gave it £915 million in 1965. They are both estimates, and neither can be exact.
But the Treasury must know, because it has deduced the yield what this low level of betting duty at 2½ per cent. will produce in the first year.
As it is a turnover duty or tax, it follows that the Treasury must have made a computation. I shall demonstrate to my right hon. Friend the Member for Enfield, West in no uncertain terms that I am not a speculative creature. I have done my homework with the greatest thoroughness in this matter. I quote from the Minutes of Evidence taken before the Royal Commission on Betting, Lotteries and gaming on Thursday, 21st July, 1949. A principal witness was Sir William Croft, K.C.B., K.B.E., C.I.E., C.V.O., head of the Board of Customs and Excise. This is the evidence which he gave about horse racing only. He said:
In 1927–28 "—
that being the last year of the Winston Churchill betting duty—
the actual taxed turnover was £86 million, of which the on-the-course figure was £37 million and the off-the-course figure was £49 million. In 1928–29 the total was £88 million, on-the-course was £48 million, and off-the-course £40 million.
Later Sir William continued in response to a question:
Laid-off bets did not come under the betting duty.
But they do this time. That is the difference.
The duty was £88 million of horse-racing turnover only, in 1927–28. I shall now adjust the figure for the fall in the value of money. The £ in 1928 is today worth 5s., and four times £88 million is £352 million. Now I shall adjust for the increase in horse racing, which is said to be of the order of 50 per cent, in the last


30 years. I have no figure for 1928. Fifty per cent. added on to £352 million would give a turnover figure of £528 million for horse racing, excluding laid-off bets.
I now appeal to my right hon. Friend the Member for Enfield, West not to rise and tell me that the total turnover on all betting in this country last year was only £150 million. I demonstrate that on horse racing alone it was certainly more than £500 million. The Economist came to the same conclusion.

Mr. St. John-Stevas: May I make it plain to my hon. Friend that my intervention was nothing to do with my hon. Friend's criticism of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) and that any aid that I afforded my hon. Friend in his campaign was quite unintentional and purely coincidental? At Me same time I am both pleased and apprehensive to be rehabilitated in the favours of my hon. Friend after yesterday's division between us.

Sir C. Nabarro: I congratulate my hon. Friend on his humorous intervention. I was not intending to associate his statement in connection with the Economist with what my right hon. Friend said to me earlier in the day. What I was trying o do, I think not entirely unsuccessfully, was to demonstrate that the Economist and the Report of the Churches Council on Gambling are approximately in line at fixing the turnover at more than £900 pillion in respect of all betting in the aggregation, last year, whereas my right non. Friend derided it by saying that it was only £150 million.
Of course I know that the £915 million ncludes football pools—but I did not say otherwise. Of course it includes grey—found racing—but I did not say otherwise. Of course it includes Premium Bond interest—but I did not say otherwise. They are all forms of gambling. One of my reasons for supporting the betting duty tonight is this simple proposition. For years and years we have supported in successive Budgets the taxing of football pools at 30 per cent. and the taxing of greyhound racing at 10 per cent. I have always questioned why football pools and greyhound racing should be singled out in a highly discriminatory fashion whilst the whole of horse racing, the whole of bingo, and the whole of every other form

of highly speculative activity which comes within the ambit of gambling and gaming is left untaxed. I have always wanted them all to be on the same uniform and nondiscriminatory basis of 2d. in the shilling of turnover, or 16⅔ per cent.—thereby reducing the football duty from 30 per cent. to that figure and increasing the greyhound duty to that figure.
On Finance Bill after Finance Bill I have generally taken the majority of Members with me. That is why this year I welcome this first attempt to impose a betting duty based on turnover of betting which, in my judgment, is the correct basis for taxing it. Were I Chancellor of the Exchequer, this is what I would do. I would do it at a much higher rate. I do not believe that the nation would cavil or take unkindly to 2d. in the 1 s. of every bet in the form of taxation, when we are taxing motor cars at 25 per cent. and whisky, beer and cigarettes on the huge scale we all know about.
This is a moral issue to me. It is also an issue of conscience to me. I am allowed to parade my conscience once a year. Tonight I shall vote for the Government on this Clause because they are right, and—I say this with the greatest sorrow—against my own party.

8.45 p.m.

Mr. MaeDermot: I propose to follow the example of the right hon. Member for Enfield, West (Mr. Iain Macleod) and speak briefly in this interesting debate on the Question, That the Clause stand part of the Bill. It is, perhaps, right that we on the Front Benches should do so because the Committee has had to listen to rather a lot from the Front Benches in all the debates on the specific Amendments. The Amendments have already raised most of the really interesting points on the Clause and inevitably, therefore, this debate has been of a more general character.
The right hon. Gentleman has again stuck his flag firmly in the ground to demonstrate his belief that we are setting about this tax, which in itself he welcomes, in the wrong way. As he said on Second Reading, he believes that the object could be achieved more fairly—I think he would say that—and certainly more cheaply and effectively by taxing the premises, the telephone and the licence


rather than by having a 2½ per cent. tax on stakes.
It would not be in order for me to go in detail into the reasons why we have rejected the right hon. Gentleman's solution and chosen our own. Suffice it to say that we are satisfied that, to secure the same yield—the right hon. Gentleman made clear that he thought we ought to aim at the same yield—the kind of tax which he suggests would operate quite oppressively and unfairly on the small bookmaker.
We have heard a lot about the small bookmaker in these debates. It has been suggested that we have ignored his interests. I assure the Committee that quite the opposite is true. As is well known, we received many representations from bookmakers saying that we ought to make it a condition of this tax that it should be passed on by the bookmaker to the punter in the form of a deduction from winnings. This might well suit the larger bookmakers, but we have received a deputation from small bookmakers urging the Chancellor not to do that because, they feel, it would operate harshly and unfairly upon them. We have given great attention to the interests of the small bookmaker, and a number of the proposals put to us by the associations representing largely the interests of the larger bookmakers we have rejected simply because of the effect they would have on the small bookmaker.
It may well be that a tax on the premises, telephone and licence would be simpler in some ways. It would certainly be welcomed
by the larger bookmakers. But we have to look at the intention of the tax and, of course, first and foremost, we must be guided by what we think is workable. I entirely agree with the hon. Member for the Isle of Thanet (Mr. Rees-Davies) that we should be concerned here with administration and not with morality. This is our concern. The social aspects of it are not. We are concerned to produce an effective tax which will be spread fairly, and this is what we aim to do. I think that everyone will agree that, in principle, provided that it is administratively workable and effective, the tax on stakes is the fairest way to proceed and will give the fairest spread because it will tax what we want to tax,

that is, the money coming in to betting, and it will tax it at an equal level.
It has been said by hon. Members again and again that the tax is quite unworkable, but we have had precious few reasons and precious few arguments to support that suggestion. Some were adduced in the debates on the Amendments, and I sought to answer them to the best of my ability. On the general allegations, all I can do is to retort with a general answer. We feel confident now that this is a workable tax and that it can be operated without imposing any administrative burden on bookmakers in particular which would make their job impracticable. On Clause 14 we shall have an opportunity to discuss further the actual procedures. All I say now is that we are satisfied that it is a workable scheme.
Of all fields this, perhaps, is the one in which it would be most rash to make prophecies. I entirely respect the view of the right hon. Member for Enfield, West, which, as has been quite evident in these debates, is based on very extensive knowledge. I would not expect him to attach any weight to my personal judgment in the matter, though he may attach a little more to that of the Paymaster-General. All I can do is invite him to challenge the Paymaster-General to a bet. I am glad to say that we in the Treasury have had my right hon. Friend's advice in this matter, and I think that, at least in a modest sum, he would be prepared to stake his opinion against that of the right hon. Gentleman. It will be one of the interesting features, in working out this tax, to see whose judgment is the better.

Mr. J. T. Price: As my hon. and learned Friend brings the Paymaster-General into this, may I take this opportunity to dissociate myself from my right hon. Friend's views? I had to combat them all through our proceedings on the Betting and Gaming Bill some years ago, and I reject almost entirely everything he thought about it. I am sorry to learn that Her Majesty's Government have been seriously influenced by what he thinks in this case.

Mr. MacDermot: I assure my hon. Friend, if it comforts him at all, that our decisions in these matters were not based on what the Paymaster-General told us,


though we have had the advantage of his scrutiny of the proposals as well as those of others.
The question of the total turnover is, of course, notoriously a matter on which opinions differ greatly. It needs no great mathematical ability to see that the £11 million yield which we estimate must be based on a turnover of £440 million. This is, of course, a more modest estimate than that of the Churches Council. The Churches Council may be right. I would not quarrel with its view. Ours is deliberately a conservative estimate. If some of the figures which have been suggested during the debate are right, the yield from the tax will be greater than that which we have allowed for. I think that the 1965 figure of the Churches Council estimated a turnover of untaxed betting of £610 million.

Sir S. McAdden: My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) was most anxious to establish the Treasury estimate of the turnover. The hon. and learned Gentleman will remember that the Chancellor of the Exchequer specifically rejected the figure of £900 million and said that it was very much lower than that.

Mr. MacDermot: The figure of £900 million includes, as the hon. Member for Worcestershire, South (Sir G. Nabarro) pointed out, elements besides those which we are now proposing to tax. Substantial revenue already comes into the Exchequer from the existing pool betting duty and other duties on betting.
We have now been discussing this Clause in total for about four and a half hours. Personally, I have found them extremely interesting debates, but I hope that we have now reached the stage when the Committee will feel that a decision on it should be reached.

Mr. Iain Macleod: I do not want to go into the turnover argument. In a sense, both sides are right. It may
be summed up by saying that if one goes to a race meeting and puts 2s. 6d. on each of the eight races, in one sense one may be said to have spent £1; but if one has normal good luck and ill-luck, one will receive back about 18s., so that one's personal expenditure is 2s. Basically, that is the difference between the two. My right hon. Friend the then Chancellor of the Exchequer, in his Budget speech in 1963, said that the net expenditure on betting was probably not much more than £100 million a year. Much of this argument, therefore, is about nomenclature.
I have had a brief discussion of this matter, in passing, with the Paymaster-General and I am confirmed in my view that we should divide the Committee on this Clause. I am sure that the hon. Member for Westhoughton (Mr. J. T. Price) will join us in the Division Lobby to cancel out my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) on the other side.
I want to make these things crystal clear from this Dispatch Box, speaking for this side of the Committee. It is quite clear that we are not voting against a general betting duty. That is point No. 1. Point No. 2 is that we are not suggesting that the Chancellor should collect less than this amount of money. That is absolutely clear. We have argued for some hours that he is going about it the wrong way. Having had, as I agree, an extremely good argument, for which I am grateful, I suggest that the Committee should now divide.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 188, Noes 96.

Division No. 23.]
AYES
[8.55 p.m.


Abse, Leo
Bessell, Peter
Carmichael, Neil


Anderson, Donald
Blackburn, F.
Carter-Jones, Lewis


Archer, Peter
Boardman, H.
Castle, Rt. Hn. Barbara


Armstrong, Ernest
Booth, Albert
Chapman, Donald


Ashley, Jack
Bowden, Rt. Hn. Herbert
Coe, Denis


Atkins, Ronald (Preston, N.)
Bray, Dr. Jeremy
Coleman, Donald


Atkinson, Norman (Tottenham)
Brooks, Edwin
Concannon, J. D.


Bagier, Gordon A. T.
Brown, Hugh D. (G'gow, Proven)
Conlan, Bernard


Barnett, Joel
Brown,Bob(N'c'tle-upon-Tyne,W.)
Cousins, Rt. Hn. Frank


Beaney, Alan
Buchan, Norman
Cronin, John


Bence, Cyril
Buchanan, Richard (G'gow, Sp'burn)
Crosland, Rt. Hn. Anthony


Benn, Rt. Hn. Anthony Wedgwood
Callaghan, Rt. Hn. James
Dalyell, Tam


Bennett, James (G'gow, Bridgeton)
Cant, R. B.
Davidson, Arthur (Accrington)




Davidson,James(Aberdeenshire,W.)
Jenkins, Hugh (Putney)
Perry, George H. (Nottingham, S.)


Davies, Dr. Ernest (Stretford)
Jenkins, Rt. Hn. Roy (Stechford)
Price, Christopher (Perry Barr)


Davies, Harold (Leek)
Johnston, Russell (Inverness)
Price, Thomas (Westhoughton)


Davies, Robert (Cambridge)
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)
Price, William (Rugby)


Dewar, Donald
Judd, Frank
Probert, Arthur


Diamond, Rt. Hn. John
Kenyon, Clifford
Rankin, John


Dickens, James
Lee, John (Reading)
Roberts, Albert (Normanton)


Doig, Peter
Lestor, Miss Joan
Roberts, Goronwy (Caernarvon)


Donnelly, Desmond
Lever, L. M. (Ardwick)
Roberts, Gwilym (Bedfordshire, S.)


Dunnett, Jack
Lomas, Kenneth
Robinson,Rt.Hn.Kenneth(St.P'c'as)


Dunwoody, Mrs. Gwyneth (Exeter)
Luard, Evan
Robinson, W. O. J. (Walth'stow, E.)


Dunwoody, Dr. John (F'th &amp; C'b'e)
Lubbock, Eric
Rodgers, William (Stockton)


Edwards, William (Merioneth)
Lyon, Alexander W. (York)
Rose, Paul


Ellis, John
Lyons, Edward (Bradford, E.)
Ross, Rt. Hn. William


Ensor, David
Mabon, Dr. J. Dickson
Rowland, Christopher (Meriden)


Faulds, Andrew
McBride, Neil
Rowlands, E. (Cardiff, N.)


Finch, Harold
McCann, John
Ryan, John


Fitch, Alan (Wigan)
MacColl, James
Sheldon, Robert


Fletcher, Raymond (Ilkeston)
MacDermot, Niall
Shore, Peter (Stepney)


Fletcher, Ted (Darlington)
Macdonald, A. H.
Silkin, John (Deptford)


Floud, Bernard
McGuire, Michael
Slater, Joseph


Foley, Maurice
Mackenzie, Alasdair(Ross&Crom'ty)
Spriggs, Leslie


Forrester, John
Mackenzie, Gregor (Rutherglen)
Steel, David (Roxburgh)


Fowler, Gerry
Mackie, John
Steele, Thomas (Dunbartonshire, W.)


Gardner, A. J.
Maclennan, Robert
Stonehouse, John


Garrett, W. E.
McNamara, J. Kevin
Thomas, Iorwerth (Rhondda, W.)


Gourlay, Harry
MacPherson, Malcolm
Tinn, James


Gregory, Arnold
Mahon, Peter (Preston, S.)
Tuck, Raphael


Griffiths, David (Rother Valley)
Mahon, Simon (Bootle)
Urwin, T. W.


Griffiths, Rt. Hn, James (Llanelly)
Mapp, Charles
Wainwright, Edwin (Dearne Valley)


Griffiths, Will (Exchange)
Marquand, David
Wainwright, Richard (Coins Valley)


Grimond, Rt. Hn. J.
Millan, Bruce
Walden, Brian (All Saints)


Hale, Leslie (Oldham, W.)
Mitchell, R. C. (S'th'pton, Test)
Walker, Harold (Doncaster)


Hamilton, James (Bothwell)
Morgan, Elystan (Cardiganshire)
Wallace, George


Hamilton, William (Fife, W.)
Morris, Charles R. (Openshaw)
Watkins, David (Consett)


Hannan, William
Murray, Albert
Wellbeloved, James


Harper, Joseph
Nabarro, Sir Gerald
Wells, William (Walsall, N.)


Hart, Mrs. Judith
Noel-Baker,Rt. Hn.Philip(Derby,S.)
Whitaker, Ben


Henig, Stanley
Oakes, Gordon
White, Mrs. Eirene


Herbison, Rt. Hn. Margaret
Ogden, Eric
Whitlock, William


Hilton, W. S.
O'Malley, Brian
Willey, Rt. Hn. Frederick


Hooley, Frank
Oswald, Thomas
Williams, Alan (Swansea, W.)


Homer, John
Owen, Dr. David (Plymouth, S'tn)
Williams, Alan Lee (Homchurch)


Houghton, Rt. Hn. Douglas
Padley, Walter
Williams, Clifford (Abertillery)


Howarth, Harry (Wellingborough)
Paget, R. T.
Willis, George (Edinburgh, E.)


Howie, W.
Pannell, Rt. Hn. Charles
Winnick, David


Hughes, Emrys (Ayrshire, S.)
Pardoe, J.
Winstanley, Dr. M. P.


Hughes, Hector (Aberdeen, N.)
Pearson, Arthur (Pontypridd)



Hughes, Roy (Newport)
Peart, Rt. Hn. Fred
TELLERS FOR THE AYES:


Jackson, Colin (B'h'se & Spenb'gh)
Pentland, Norman
Mr. Lawson and Mr. Bishop.


Janner, Sir Barnett
Perry, Ernest G. (Battersea, S.)





NOES


Alison, Michael (Barkston Ash)
Grant, Anthony
Miscampbell, Norman


Astor, John
Griffiths, Eldon (Bury St. Edmunds)
Monro, Hector


Barber, Rt. Hn. Anthony
Gurden, Harold
More, Jasper


Batsford, Brian
Hall, John (Wycombe)
Morrison, Charles (Devizes)


Bitten, John
Hall-Davis, A. G. F.
Murton, Oscar


Braine, Bernard
Harris, Frederic (Croydon, N.W.)
Neave, Airey


Brinton, Sir Tatton
Harvey, Sir Arthur Vere
Nott, John


Buck, Antony (Colchester)
Hawkins, Paul
Pike, Miss Mervyn


Bullus, Sir Eric
Heald, Rt. Hn. Sir Lionel
Pink, R. Bonner


Carlisle, Mark
Heath, Rt. Hn. Edward
Price, David (Eastleigh)


Cary, Sir Robert
Heseltine, Michael
Rees-Davies, W. R.


Chichester-Clark, R.
Higgins, Terence L.
Roots, William


Clark, Henry
Hiley, Joseph
Rossi, Hugh (Hornsey)


Clegg, Walter
Holland, Philip
Sharpies, Richard


Corfield, F. V.
Hordern, Peter
Shaw, Michael (Seb'gh & Whitby)


Craddock, Sir Beresford (Speithorne)
Howell, David (Guildford)
Sinclair, Sir George


Crosthwaite-Eyre, Sir Oliver
Hunt, John
Smith, John


Crouch, David
Jenkin, Patrick (Woodford)
Stodart, Anthony


Cunningham, Sir Knox
Jennings, J. C. (Burton)
Stoddart-Scott, Col. Sir M. (Ripon)


Dean, Paul (Somerset, N.)
Jopling, Michael
Summers, Sir Spencer


Deedes, Rt. Hn. W. F. (Ashford)
King, Evelyn (Dorset, S.)
Taylor,Edward M.(G'gow,Cathcart)


Digby, Simon Wingfield
Lloyd, Ian (P'tsm'th, Langstone)
Taylor, Frank (Moss Side)


Elliott, R.W.(N'c'tle-upon-Tyne,N.)
McAdden, Sir Stephen
Temple, John M.


Eyre, Reginald
MacArthur, Ian
Thatcher, Mrs. Margaret


Galbraith, Hn. T. G.
Maclean, Sir Fitzroy
Turton, Rt. Hn. R. H.


Gibson-Watt, David
Macleod, Rt. Hn. lain
Vaughan-Morgan, Rt. Hn. Sir John


Giles, Rear-Adm. Morgan
Maddan, Martin
Vickers, Dame Joan


Gilmour, Sir John (Fife, E.)
Maxwell-Hyslop, R. J.
Ward, Dame Irene


Glover, Sir Douglas
Maydon, Lt.-Cmdr. S. L. C.
Weatherill, Bernard


Goodhart, Philip
Mills, Stratton (Belfast, N.)
Wells, John (Maidstone)







Whitelaw, William
Wolrige Gordon, Patrick
TELLERS FOR THE NOES:


Wills, Sir Gerald (Bridgwater)
Worsley, Marcus
Mr. Pym and Mr. Blaker.


Wilson, Geoffrey (Truro)
Younger, Hn. George

Clause 12.—(GAMING LICENCE DUTY.)

Mr. Iain Macleod: I beg to move Amendment No. 86, in page 14, line 25, to leave out "500" and insert "1,000".

The Chairman: It would be convenient if at the same time we were to discuss Amendment No. 89, in page 14, line 32, leave out "5,000" and insert "3,000".

Amendment No. 91, in page 14, line 36, leme out "£3,000" and insert "£2,000".

Amendment No. 93, in page 14, line 39, leave out "50,000" and insert "5,000"

Amendment No. 95, in page 14, line 41, after "exceeding", insert "£2,000 but not exceeding".

Amendment No. 96, in page 14, line 41, at end insert:

4. Premises which for rating purposes constitute or are comprised in a hereditament of a rateable value exceeding £3,000.
1,000 respect of each 100 or part thereof by which the rateable value exceeds 3,000. 5,000 and an additional 2,000 in

Mr. Macleod: That would be convenient, Sir Eric.
There are a number of points which we wish to raise on this Clause, but most of them can be raised very swiftly, and I would hope that we could soon either be satisfied or register our dissatisfaction, as the case may be.
I make it absolutely clear again that I have no wish that the Chancellor of the Exchequer should raise less money from the taxation of casinos and the gaming licence duty generally. Indeed, if anything, I think that he proposes to raise top little money. This time, for reasons which I explained earlier, I think that his principle is right, although there are a number of flaws in his proposal.
I remind the Committee of a point which I made on Clause 11. Moral indignation is a bad counsellor in these matters. We have often been wrong before when we set out to legislate in respect of social behaviour. In this case, never having done it before, we should perhaps be particularly careful.
The object of these Amendments, the key one of which is No. 96, is to rewrite the table which runs from lines 20 to 40 on page 14 of the Bill. I am referring to matters other than bingo. We have left the bingo column untouched. My main quarrel with the licence for all other gaming is that the three steps proposed by the Chancellor of the Exchequer—£1,000, £5,000 and £50,000—are far too few and will lead almost inevitably to very dangerous consequences. We therefore suggest that we should pull this concertina out a little. I am not wedded to these particular amounts, and I should be very happy for the Chancellor of the Exchequer on Report to give even half a nod to this proposal and rewrite my ideas so that he would obtain at least the same sum of money.
Let me make clear the differences between my proposal and that of the Chancellor of the Exchequer. I guess that he would get about the same amount of money from the proposals which I am putting before the Committee. First, we suggest a fee of £1,000 rather than £500 for the smallest casinos. The sum of £500 is dangerously small, because it is the tiny casinos—the mushroom casinos—which have some of the least attractive features of this perhaps not particularly attractive occupation, or industry, or whatever the appropriate phrase is.
The Chancellor should set his sights on small casinos higher. It is now quite common to find casinos in property the rateable value of which is very small and yet drawing in a great deal of money. I feel that they can afford much more than £500 and, perhaps considerably more than £1,000. On this step, I outbid the Chancellor of the Exchequer, as it were, although it is unusual for an Opposition to suggest an increase in taxation.
My proposal is to lower the second figure of £5,000 to £3,000. I propose a more complicated system which removes the £50,000. I also propose to remove the maximum. I am prepared to go beyond £50,000. A number of casinos can afford more, far more than £50,000. I am not encroaching on the next Amendment about "comprising within", which is important, in relation to that.
The practical effects of my proposal would be that at a rateable value of £4,000, about £25,000 would be paid, and at a rateable value of £5,000, £45,000 would be paid. It follows that, at a rateable value of £2,500, it would be £49,000, and after that it would sail on beyond the Chancellor's proposals.
The dangers of the present scheme as unamended are quite apparent if one thinks about it for a moment. If anyone has a place with a rateable value of £2,900 a year, the charge which the Chancellor proposes to levy is £5,000. If the man has a rateable value of £3,100 or, for that matter, £3,001, the charge goes up to £50,000.
It is quite obvious that there is a considerable danger here. First of all, we shall drive gambling away from the properties which are reasonably rated into lower class properties so that they will not have to pay either the £50,000 or, for that matter, the £5,000.
There are some intriguing examples which one has been able to find. There is a bingo hall in Edinburgh which caters for working and middle-class persons, with a gaming facility as an adjunct to it. The rateable value of the property is £2,997, or just under the £3,000 mark, and the profits run at about £25,000, I am told. It follows that if the rateable value was put up by £3, the Chancellor would be demanding two years' profits for his tax. I cannot see who would gain from it, and certainly the Chancellor would lose. This is a perfectly respectable place which plays for very low stakes, and it would simply fold up.
The obvious difficulty is that the tendency may well be to drive gaming into undesirable premises, because the effect of the Chancellor's three steps and three steps only clearly is to put a premium on having gaming in unattractive premises.
I regard gaming, in this sense, as being on a sort of par with drink. I do not mind people gaming at all. I do not really mind the results of the 1963 Act as much as some hon. Members do. What is important is that the Chancellor should get his cut, and at least on that he will agree with me.
The obvious danger both in this and in the next Amendment is that if

gambling is a more or less incidental activity of a perfectly respectable club, which is very common, one of two things will happen. Either that particular activity will fold up, in which case no one benefits, least of all the Chancellor because he gets no money; or, if they decide that they want to continue gambling, they are given an incentive to pack in the maximum number of roulette, chemmy or baccarat tables. In any event, the Chancellor's proposals will lead to undesirable consequences.
I do not propose to argue the case beyond that. This particular concertina is much too tight, and both the Chancellor's revenue and the climate of gaming in the country would benefit if we could extend it.

Mr. Geoffrey Hirst: I rise to support in full what my right hon. Friend has said. It will be remembered that I made quite a point of this on the Second Reading of the Finance Bill.
My right hon. Friend has said that he would feel rather fortunate if he had half a nod from the Chancellor of the Exchequer. I must admit that that was far more than I had following my own efforts. If we get half a nod tonight, we shall have achieved something, and my 16 years in Parliament will not have been entirely wasted.
9.15 p.m.
I supported my party entirely in bringing up to date a little bit our somewhat peculiar ideas about gaming. It is, however, a fact that it is far easier to open what is commonly called a casino in this country than in any other European centre. The situation has got entirely out of hand. I do not want to repeat myself, but I feel that there is a case for greater control and for the country getting revenue from it.
There is no doubt whatever that my right hon. Friend has made a substantial case for the fact that the scale is ridiculous. It is far too low. It is far too easy to open a gambling centre in this country. It is equally wrong to penalise the type of place which in all probability supplies first-class service and entertainment, and, moreover—I suppose that we must recognise it—is an asset to our tourist trade. The gap is far too wide. Of that there is no shadow of doubt.

It can be said that the Committee is as one—and that is not often the case—in believing that something should be done. The steps proposed in the Bill are not achieving the object which, I think, t ie Government have in mind. It is wrong to make it so easy that the facilities are too simple for the small place which may not be run so well and inhibit fie type of organisation which, if we are to have gambling at all, is to be encouraged.

I sincerely hope that my right hon. Friend's remarks will get that half nod. I realise that my right hon. Friend will have to take the credit for it, but I should be delighted to share it with him.

The Chief Secretary to the Treasury (Mr. John Diamond): It is clear from what the right hon. Member for Enfield, West (Mr. Iain Macleod) and the hon. Member for Shipley (Mr. Hirst) have said that there is no major difference in the Committee. The whole Committee apparently is agreed that we should have a gaming licence duty, that the revenue at which we are aiming should be no less than the figure given in the Bill and that there should be steps, but that the steps should be more frequent and should be slightly differently arrived at. It is rather on that point of detail that the issue rests.
In connection with the first Amendment, with which the case is somewhat different, the right hon. Member for Enfield, West spoke of encouragement being given to what he previously called the sleazy type of club. His hon. Friend the Member for Shipley referred to the ease with which clubs are opened and to the matter having, in his view, become somewhat out of control. When he spoke of the matter getting out of control, he did not mean out of fiscal control.
We must not confuse the function of the fiscal duty with the function of the Home Office in terms of its responsibility for the social law. My right hon. Friend the Home Secretary made a statement some little time ago that this whole matter was under review. Nothing that we are doing today will prejudice the outcome of that review or of whatever my right hon. Friend may decide to do once the review is at an end.
All that we are dealing with on this occasion, therefore, is not that aspect, but

the question of raising revenue. If the right hon. Member for Enfield, West is saying that certain clubs are inclined to be sleazy, that is a matter not for the Treasury, but for the Home Office; it is not for the fiscal law, but is for the social law. That argument, therefore, is not a sufficient one to alter the first step which we have proposed in the scale. As to the rest of the right hon. Gentleman's proposal, I agree that he is proposing, if anything, an increase rather than a decrease in the revenue. According to our information on the figures, that would be the likely effect.
There are several reasons why I cannot propose that the Committee should accept the Amendment. First, in the early stages of a new tax, it is essential to get the greatest possible simplicity and freedom from complexity, as well as the greatest economy in administration and the minimum difficulties in supervision. For that reason, therefore, we want the steps to be as few as possible. We would not select our proposed steps if they did not correspond, so far as our information goes, with the present structure. They do correspond.
The only example given by the right hon. Gentleman was one in favour of the Bill and not against it. He was arguing that there should be more steps lest there should be injustice as between those who were slightly over and those who were slightly under a certain level. He will, however, appreciate that the more steps one has, the more complications there will be and the more will people who are immediately above a certain step try to get below it. If we have a wide area between the boundaries, there is no inducement to those within that area to come down to the next one, because they have such a long way to come. Thus, a large number of steps would encourage the very process which the right hon. Gentleman seeks to discourage.
On the other hand, if anybody finds himself slightly over the margin and therefore, in his view, paying a very heavy rate of tax, it is open to him to move his premises. There is no undue difficulty about moving his premises and going to other premises which are rated within the amount which would satisfy him.

Mr. Hirst: No.

Mr. Diamond: I do not know why the hon. Member says "No". I am making a factual statement that there is nothing to prevent a licensee moving from premises which are assessed at somewhat over £3,000, for example, to premises which are assessed at somewhat under £3,000 and, therefore, reducing the level of his duty. At all events, I have demonstrated that the first argument is not an appropriate one for us in our fiscal responsibilities.
The argument of the steps is one of detail which might work both ways. From our knowledge of the facts, the steps suit the structure and we want to keep this as simple as possible. If, during the working of this tax, we should want to change it, then, as a result of experience, we would suggest alterations. I could not possibly hold out the hope, therefore, that one would know any more about it on Report than one knows about it now. On the basis of our present information we think that the scale is right.
If, in a year's time, as a result of the working of the tax and the experience we gain, we find that there is some capability of improvement, we will not hesitate to suggest that a change be made. But we must see how it works and I must, therefore, tell the hon. Gentleman that his 16 years have not been wasted and that it is possible that, in his 17th year, he will reap the dividend.

Mr. J. T. Price: At the risk of appearing inconsiderate to my right hon. Friend the Chief Secretary and incurring the displeasure of my hon. and right hon. Friends at the Treasury, I must detain the Committee for a few moments because I had to leave the Chamber for a short time but had intended to make a contribution to the discussion on this Amendment.

The Chancellor of the Exchequer (Mr. James Callaghan): My hon. Friend is very welcome.

Mr. Price: I am grateful for my right hon. Friends' welcome, but I am still going to say what I had intended to say.
I wish to refer, as I did when we were discussing the previous Amendment, to my experience in Standing Committee on the Betting and Gaming Act, 1959. On

that occasion I was constrained to make very strong protests about what was being done by Parliament. When we are considering, as we are in this Amendment, a tax on casinos—which hon. Gentlemen opposite think is not sufficiently high for the purposes of the Bill—I feel that, whether the tax is too high or too low, I cannot accept the statement just made by the Chief Secretary that the Treasury is concerned only with the fiscal aspects of this and not with the social aspects. No major Act of Parliament should be divorced from its social consequences. I hope that that does not sound pompous.
When I cast my mind back to our deliberations on that Betting and Gaming Act I recall spending months upstairs arguing these matters with hon. Gentlemen opposite, some of whom have now gone to the House of Lords. I recall being told blandly that because of the needs of the tourist industry we should liberalise our affairs and provide facilities for gambling on roulette wheels, black dice and things which I am not capable of quoting.

Sir A. V. Harvey: General Elections?

Mr. Price: I was told how we would encourage tourists to come here with bags full of dollars and francs and how that would help us with our balance of payments difficulties. It was a line which I did not accept, because I do not think that even the most ardent sponsors of that policy at that time ever envisaged that by 1966, having given licence to these premises to be established throughout the country, we would have a situation in which there would be not just a few of them situated in Douglas, I.O.M., which had an unfortunate experience with them, in London, Brighton and other big centres like Manchester, but that they would have taken root in even small country towns with populations of less than 15,000.
This is a social evil of which Parliament should be aware. Many of us are aware of it. The encouragement which we have given
by legislation to the establishment of many of these rat-holes is a moral reproach to the country and it is not unconnected with any fiscal action we may take. I shall support the Amendment for the reasons I gave for supporting the previous one, although I will not


detain the Committee by repeating them. If we create a situation in which the State has an increasing vested interest in these sort of places, without at the same time having drastic legislation to limit the operation of casinos, we will be failing in our duty to the electorate.
I strongly plead with my hon. and right hon. Friends at the Treasury, who have the great responsibility of conduct the affairs of the nation in difficult times, not to dismiss from their minds the fact that in our enlightened democracy—in the Welfare State to which some of s have made a contribution—we have created a state of affairs in which many of our resources, many of the fruits of planning and increased standards of life are being dissipated by this sort of thing, a thing which is permeating our social He to an increasing extent.
Some hon. Members may not think it right that I should say these things, but when I go to the Continent of Europe, many countries of which are more sophisticated in handling these question than we are, I do not find that unlimited licences are granted for the operation of casinos. They are limited to certain spots—in France, Germany and elsewhere——

The Deputy Chairman (Mr. Sydney Irving): Order. I am sorry to interrupt the hon. Member. He is making an interesting speech, but he must relate his remarks to the figures we are considering.

Mr. Price: I apologise for a slight digression. Perhaps I was carried away. I do not want to be emotional, but factual and to look at this matter in its broad social context. I was stimulated to say what I did, perhaps a little out of order, by the reference to the fact that the Treasury was not concerned with moral issues. The Treasury ought to be concerned with them. This House ought to be concerned with the social consequences of what we are doing.
By this Amendment, which I intend to support, for reasons which I have given, amended to any other figure, we will make it even more difficult in the future to bring in the kind of legislation which is necessary to restrain the activities of casinos if the State becomes a partner in the whole operation of them. I think that this is a reasonable point to put in a Committee of this kind. I apologise for being so long in saying it, and I hope

that the Chancellor and his colleagues will take due note of what I have said.

9.30 p.m.

Mr. Hirst: The Committee is indebted to the hon. Member for Westhoughton (Mr. J. T. Price) for his refreshing contribution to the debate. I realise that, although I am somewhat in tune with the hon. Gentleman, if I followed his speech too much I would be more out of order than he was, so I shall not do so.
The right hon. Gentleman the Chief Secretary cannot hope to get away with the argument that he advanced. He knows that I have a great respect for him. As the years go by my respect does not diminish, it only gets greater, but there are limits, and he has stretched those limits tonight on this Amendment beyond any stage invented by man.
The right hon. Gentleman cannot expect the Committee to accept the argument that for the sake of the structure this must be maintained. What is the right hon. Gentleman talking about? Is there such a doctrinaire approach in the Treasury that the figures have to be in certain brackets to make sense, notwithstanding the argument which my right hon. Friend produced, and which I somewhat humbly supported?
This is a fundamental matter whereby we are attempting to meet the case of the Government who say, as we have done quite openly, that here is a good case for revenue raising. There is a case for using fiscal methods to ensure that establishments are of the right sort of order and calibre. How often have the Government met with this co-operation, even from me? The Chancellor can probably answer that—not very seldom. But here we are holding out our hands to help the right hon. Gentleman, recognising the merits of the case before us, and what do we get? We get the most "shirty" answer that it must be done for the sake of the structure.
The arguments are not dealt with on their merits. We are given no reasoned answers. This is not being done to improve the establishments which we feel are not right, or to ensure that the standard of casinos is maintained and they can he a credit to this country. It is being done for the sake of the structure.
Most of the Continental casinos are first-class establishments, because the


authorities there see that they are. It is difficult to secure a licence for a casino. The right hon. Gentleman may criticise my party for the state of affairs in this country, and I shall not mind if he does. The gate has been opened to hundreds of people to open these establishments. I think that possibly in our efforts to bring the country up to date we over-liberalised in accepting that argument at the time, but here is a chance, by fiscal methods, to correct that a little. The whole responsibility cannot be handed over to the Home Secretary. It is reasonable that this should be a fiscal charge. The Chief Secretary is too intelligent to try to win the argument on the question of structure, and I hope that he will not be offended if I say that to try to do so is utter impertinence.

Mr. Diamond: I am not offended. I hope that the hon. Gentleman will not mind if I say that I did not say the things which he is alleging against me.

Mr. Hirst: Perhaps the right hon. Gentleman will get up in due course and say what he did say. No doubt, it would be of some benefit and some guidance to the House if he did. If he did not give that indication, at least it will be the recollection of the Committee that that is the impression which was received—that the structure came first, that that was important, the alpha and omega of the whole matter and that the arguments which my right hon. Friend produced, which I support and which I mentioned on Second Reading, did not count compared with this doctrinaire approach of the Treasury.
The right hon. Gentleman knows well—his experience of these debates is considerable—that it is no good coming to the Committee and expecting to get cooperation with that sort of argument, advanced and discussed behind closed doors before he came here without the slightest intention of listening to the case to the contrary. If he feels that he can get the co-operation of the Committee in that way, he is profoundly mistaken.

Mr. Callaghan: I should like to pick up the point made by my hon. Friend the Member for Westhoughton (Mr. J. T. Price), because he got it wrong. I would feel very affronted if my hon. Friend were to think that we approach this matter

from an amoral point of view. We do not, and that is not what my right hon. Friend the Chief Secretary said. He said that he would propose to use the fiscal machine in order to try to get a slice of what people spend on gaming; he would not use the machine to regulate what some people may think are the social consequences of gaming. This would be achieved by the review which the Home Secretary is conducting. Meanwhile, we are taking a slice of the money spent.
It would obviously be possible to levy rates of licence duty which would make it penally impossible to carry on the work. Our approach to this—we have thought about this very carefully during the last six months—is to ask what it is reasonable to do in the shape of getting something fiscally, some revenue, out of this. If I am asked to express a personal view, in my view, unlike that of the right hon. Member for Enfield, West (Mr. Iain Macleod), the 1963 Act went much too far and there is a substantial case for a drastic revision of it. I am not hereby announcing any change of Government policy—that is entirely a different story.
I should like to say this to my hon. Friend, because I would not want him to think that we were indifferent to the consequences.
The hon. Member for Shipley (Mr. Hirst) got more than half a nod. The plain truth is that neither the right hon. Member for Enfield, West nor I know which figures are likely in the end to be right. Our advice is that the figures which we have put in are not likely to create the theoretical difficulties which he foresaw, and he has not produced an illustration of how they do. We have made inquiries and we believe that the scale is about right.
However, everybody must approach this scale and this question of tax with a certain amount of humility. As my right hon. Friend said, if at the end of a year's experience we find that these cases have been thrown up, we shall obviously need to revise the scale and consider it again. This is the right way. If I thought that the right hon. Gentleman's figures were right, no consideration of pride would prevent me from accepting them. However, I do not think that his information is any better than mine.
I would therefore ask him to accept them and, as he wants to get on—[HON. MEMBERS: "No."] That is a matter for the Opposition to decide. I simply make the request, even though it is rejected. I know that the right hon. Gentleman wants to get on, as we do. It is in this way that we are approaching this scale.

Mr. Iain Macleod: But one of the conditions of getting on is that we receive answers which are acceptable, even if we may disagree with them. Although the Chancellor did his best to cover up the gaffe of the Chief Secretary, I do not think that he succeeded. The Chief Secretary, every now and then, in his amiable way, is in the habit of using a most unhappy phrase. We were doing most peaceably on hovercraft last night until he discovered that it was a smuggler's weapon. In consequence, we were later in bed than we might otherwise have been.
I need not go over the right hon. Gentleman's argument. I share the contempt for it that his hon. Friend showed and that I thought my hon. Friend the Member for Shipley (Mr. Hirst) showed ill his devastating reply to it. It is not good enough for the Government to say that their left hand does not know what their right hand is doing, or to argue that
matters which are full of profound social consequences can be regarded as entirely revenue matters. They cannot. This is a point which I have made to the Committee on both the last two

Clauses. We are in an extraordinary position when the Opposition are offering the Chancellor of the Exchequer more money in taxation and he is saying "No." Therefore, we need not argue about that.

On the question of the steps, we are simply suggesting that the very wealthy casinos should pay more. That seems reasonable, but the Government intend to oppose this. We suggest that the mushroom casino should pay more. That also seems reasonable, but the Government intend to oppose it. We suggest that in the middle, where the two steps of £5,000 and £50,000 more than span the activities of many places where gaming is an incidental and often comparatively harmless activity, the argument must lie on balance with our side of the Committee.

This is not a case of the Government saying, "We might do something next year". We are confronted with a flat "No" this year. If we go into the Division Lobbies in a moment people will no doubt come from all over the place and vote. In advising my right hon. and hon. Friends to divide on the Amendment I say that whichever Lobby they may enter no one who has heard this interchange can doubt that the argument and right are on the side of the Amendment. Therefore, we wish to take it to a Division.

Question put, That "500" stand part of the Clause:—

The Committee divided: Ayes 172, Noes 106.

Division No. 24.]
AYES
[9.41 p.m.


Abse, Leo
Castle, Rt. Hn. Barbara
Floud, Bernard


Anderson, Donald
Chapman, Donald
Foley, Maurice


Archer, Peter
Coe, Denis
Forrester, John


Armstrong, Ernest
Coleman, Donald
Fowler, Gerry


Ashley, Jack
Concannon, J. D.
Gardner, A. J.


Atkins, Ronald (Preston, N.)
Conlan, Bernard
Garrett, W. E.


Atkinson, Norman (Tottenham)
Cronin, John
Gourlay, Harry


Bagier, Gordon A. T.
Crosland, Rt. Hn. Anthony
Gregory, Arnold


Barnett, Joel
Dalyell, Tam
Griffiths, David (Rother Valley)


Beaney, Alan
Davidson, Arthur (Accrington)
Griffiths, Rt. Hn. James (Llanelly)


Bence, Cyril
Davies, Dr. Ernest (Stretford)
Griffiths, Will (Exchange)


Benn, Rt. Hn. Anthony Wedgwood
Davies, Harold (Leek)
Hale, Leslie (Oldham, W.)


Blackburn, F.
Davies, Robert (Cambridge)
Hamilton, James (Bothwell)


Boardman, H.
Dewar, Donald
Hamilton, William (Fife, W.)


Booth, Albert
Diamond, Rt. Hn. John
Hannan, William


Bowden, Rt. Hn. Herbert
Dickens, James
Harper, Joseph


Bray, Dr. Jeremy
Doig, Peter
Hart, Mrs. Judith


Brooks, Edwin
Donnelly, Desmond
Henig, Stanley


Brown, Hugh D. (G'gow, Proven)
Dunwoody, Mrs. Gwyneth (Exeter)
Herbison, Rt. Hn. Margaret


Brown,Bob(N'c'tle-upon-Tyne,W.)
Dunwoody, Dr. John (F'th &amp; C'b'e)
Hilton, W. S.


Buchan, Norman
Edwards, William (Merioneth)
Hooley, Frank


Buchanan, Richard (G'gow, Sp'burn)
Ellis, John
Horner, John


Callaghan, Rt. Hn. James
Ensor, David
Houghton, Rt. Hn. Douglas


Cant, R. B.
Faulds, Andrew
Howarth, Harry (Wellingborough)


Carmichael, Neil
Fletcher, Raymond (Ilkeston)
Howie, W.


Carter-Jones, Lewis
Fletcher, Ted (Darlington)
Hughes, Emrys (Ayrshire, S.)




Hughes, Hector (Aberdeen, N.)
Marquand, David
Ross, Rt. Hn. William


Hughes, Roy (Newport)
Millan, Bruce
Rowland, Christopher (Meriden)


Jackson, Colin (B'h'se & Spenb'gh)
Miller, Dr. M. S.
Rowlands, E. (Cardiff, N.)


Janner, Sir Barnett
Mitchell, R. C. (S'th'pton, Test)
Ryan, John


Jenkins, Hugh (Putney)
Morgan, Elysian (Cardinganshire)
Sheldon, Robert


Jenkins, Rt. Hn. Roy (Stechford)
Morris, Charles R. (Openshaw)
Shore, Peter (Stepney)


Jones,Rt.Hn.SirEiwyn(W.Ham,S.)
Murray, Albert
Silkin, John (Deptford)


Judd, Frank
Noel-Baker,Rt.Hn.Philip(Derby,S.)
Spriggs, Leslie


Kelley, Richard
Oakes, Gordon
Steele, Thomas (Dunbartonshire, W.)


Kenyon, Clifford
Ogden, Eric
Stonehouse, John


Kerr, Russell (Feltham)
O'Malley, Brian
Thomas, Iorwerth (Rhondda, W.)


Lee, John (Reading)
Oswald, Thomas
Tinn, James


Lestor, Miss Joan
Owen, Dr. David (Plymouth, S'tn)
Tuck, Raphael


Lever, L. M. (Ardwick)
Padley, Walter
Urwin, T. W.


Lomas, Kenneth
Paget, R. T.
Wainwright, Edwin (Dearne valley)


Luard, Evan
Pannell, Rt. Hn. Charles
Walden, Brian (All Saints)


Lyon, Alexander W. (York)
Pearson, Arthur (Pontypridd)
Walker, Harold (Doncaster)


Lyons, Edward (Bradford, E.)
Peart, Rt. Hn. Fred
Wallace, George


Mabon, Dr. J. Dickson
Perry, Ernest G. (Battersea, S.)
watkins, David (Consett)


McBride, Neil
Perry, George H. (Nottingham, S.)
Wells, William (Walsall, N.)


McCann, John
Price, Christopher (Perry Barr)
Whitaker, Ben


MacColl, James
Price, Thomas (Westhoughton)
White, Mrs. Eirene


MacDermot, Niall
Price, William (Rugby)
Whitlock, William


Macdonald, A. H.
Probert, Arthur
Willey, Rt. Hn. Frederick


McGuire, Michael
Rankin, John
Williams, Alan (Swansea, W.)


Mackenzie, Gregor (Rutherglen)
Roberts, Albert (Normanton)
Williams, Alan Lee (Hornchurch)


Mackie, John
Roberts, Goronwy (Caernarvon)
Williams, Clifford (Abertillery)


Maclennan, Robert
Roberts, Gwitym (Bedfordshire, S.)
Willis, George (Edinburgh, E.)


McNamara, J. Kevin
Robinson,Rt.Hn.Kenneth(St.P'c'as)
winnick, David


MacPherson, Malcolm
Robinson, W. O. J. (Walth'stow, E.)



Mahon, Peter (Preston, S.)
Rodgers, William (Stockton)
TELLERS FOR THE AYES:


Mahon, Simon (Bootle)
Rose, Paul
Mr. Lawson and Mr. Bishop


Mapp, Charles






NOES


Aiison, Michael (Barkaton Ash)
Hall-Davis, A. G. F.
Pardoe, J.


Astor, John
Harris, Frederic (Croydon, N.W.)
Pike, Miss Mervyn


Batsford, Brian
Harvey, Sir Arthur Yore
Pink, R. Bonner


Bessell, Peter
Hastings, Stephen
Price, David (Eastleigh)


Biffen, John
Hawkins, Paul
Pym, Francis


Boyd-Carpenter, Rt. Hn. J.
Heseltine, Michael
Roots, William


Braine, Bernard
Higgins, Terence L.
Rossi, Hugh (Hornsey)


Brinton, Sir Tafton
Hiley, Joseph
Sharpies, Richard


Buck, Antony (Colchester)
Holland, Philip
Shaw, Michael (Sc'b'gh & Whitby)


Bullus, Sir Eric
Hordern, Peter
Sinclair, Sir George


Carlisle, Mark
Howell, David (Guildford)
Smith, John


Cary, Sir Robert
Hunt, John
Steel, David (Roxburgh)


Chichester-Clark, R.
Jenkin, Patrick (Woodford)
Stodart, Anthony


Clark, Henry
Jennings, J. C. (Burton)
Stoddart-Scott, Col. Sir M. (Ripon)


Clegg, Walter
Johnston, Russell (Inverness)
Summers, Sir Spencer


Corfield, F. V.
Jopling, Michael
Taylor,Edward M.(G'gow,CathCart)


Craddock, Sir Beresford (Spelthorne)
King, Evelyn (Dorset, S.)
Taylor, Frank (Moss Side)


Crosthwaite-Eyre, Sir Oliver
Lloyd, Ian (P'tsm'th, Langstone)
Temple, John M.


Crouch, David
Lubbock, Eric
Thatcher, Mrs. Margaret


Cunningham, Sir Knox
McAdden, Sir Stephen
Thorpe, Jeremy


Davidson,James(Aberdeenshire, W.)
MacArthur, Ian
Turton, Rt. Hn. R. H.


Dean, Paul (Somerset, N.)
Mackenzie,Alasdair(Ross &amp; Crom'ty)
Vaughan-Morgan, Rt. Hn. Sir John


Deedes, Rt. Hn. W. F. (Ashford)
Maclean, Sir Fitzroy
Vickers, Dame Joan


Digby, Simon Wingfield
Macleod, Rt. Hn. lain
Wainwright, Richard (Colne Valley)


Elliott, R. W.(N'c'tle-upon-Tyne,N.)
Madden, Martin
Walker, Peter (Worcester)


Eyre, Reginald
Maxwell-Hyslop, R. J.
Ward, Dame Irene


Galbraith, Hn. T. G.
Maydon, Lt.-Cmdr. S. L. C.
Weatherill, Bernard


Gibson-Watt, David
Mills, Stratton (Belfast, N.)
Wells, John (Maidstone)


Giles, Rear-Adm. Morgan
Miscampbell, Norman
Whitelaw, William


Gilmour, Sir John (Fife, E.)
Mono, Hector
Wills, Sir Gerald (Bridgwater)


Glover, Sir Douglas
More, Jasper
Wilson, Geoffrey (Truro)


Goodhart, Philip
Morrison, Charles (Devizes)
Winstanley, Dr. M. P.


Grant, Anthony
Murton, Oscar
Wolrige-Gordon, Patrick


Griffiths, Eldon (Bury St. Edmunds)
Nabarro, Sir Gerald
Worsley, Marcus


Gurden, Harold
Heave, Airey



Hall, John (Wycombe)
Nott, John
TELLERS FOR THE NOES:




Mr. Younger and Mr. Blaker

Mr. Temple: I beg to move Amendment No. 87, in page 14, line 27, to leave out "or are comprised in".

The Deputy Chairman: I suggest that it would be for the convenience of the Committee if, with this Amendment, we

discussed the following five Amendments: Amendment No. 88, in page 14, line 40, leave out "or comprised in"; Amendment No. 90, in page 14, line 33, leave out "or are comprised in"; Amendment No. 92, in page 14, line 37. leave out "or
are comprised in"; Amendment No. 94, in page 14, line 40, leave out "or are comprised in"; and Amendment No. 97, in page 14, line 45, at end insert:
(4) (a) Where the Commissioners are satisfied that only part of a hereditament is used for the purposes of or in connection with bingo or any other game to which this section applies, a gaming licence may be issued in respect of only the part so used and the duty payable in respect of the premises shall be calculated by reference to such fairly apportioned proportion of the rateable value of the hereditament as may be fixed by the district valuer;
(b) if the provider of the premises in respect of which an apportionment is made under this subsection is aggrieved by the determination of the district valuer, he shall have the same right of objection and appeal as he would Nave had, if the value of the part of the premises used for the purposes of or in connection with bingo or any other game to which this section applies had been included in a draft valuation list.

Mr. Temple: Yes, Mr. Irving, that is acceptable.
The object of this Amendment is to some extent the same as the object of the Amendment with which we have just dealt. Basically, it is to encourage gaming
clubs which are in well-conducted premises and to discourage undesirable "dives". This is our object throughout on this Clause. If gaming is to be conducted in this country, we want to see it conducted in an orderly, seemly and sensible manner.
The effect of the Amendment is fairly clear and uncomplicated. It relates to cases in which part of premises is used either for bingo or for gaming, or for both. I stress that the reference is to part of premises being so used. The Bill provides that the determining factor for licence duty shall be the rateable value of the whole premises. The Government scheme, therefore, will encourage the maximum use of premises for gaming or bingo purposes. I emphasise this. Having paid the licence duty, the operators of the premises will have as their object the maximum amount of turnover to be gained and they will strive to use all the available premises so licenced for the purpose of playing these games.
I take the view that there is already far too much gambling. Bingo can be an addiction, and gambling is quite as compulsive, in many instances, as is drink. Along with many hon. Members who spoke in the last debate, I was a member

of the Standing Committee on the Bill which became the Betting and Gaming Act, 1963.
The gaming provisions of that Bill were
very scantily understood by members of that Committee. Moreover, I believe that the Departmental advice offered to Ministers on that Bill was not as sound as it might have been. Errors were made which have led to an outbreak of gambling on an unprecedented scale.
I know that right hon. and hon. Members opposite are relying on Departmental advice today. It was not very sound advice in 1963, and it may well be that practical advice—we hope to offer practical advice from these benches on this occasion—will outweigh the value of some of the Departmental advice which has been offered.
It is universally accepted that it is highly desirable that betting and gaming, if it is to be conducted, should be conducted in fairly large establishments which are susceptible of control. But it is this which the structure of the Clause might well discourage. The heart of our proposal is to be found in Amendment No. 97 setting out the objects which we have in mind. We propose that it should be possible for the district valuer to arrange an apportionment of the premises, apportioning a fair rateable value to that part which is used for gaming or for bingo and setting aside the rateable value of that part of the premises used for other social purposes. The Amendment provides for an appeal procedure against the district valuer's determination.
I do not submit Amendment No. 97 as being technically of the highest drafting excellence. There is one possible defect in it, namely, that it does not provide for a plan of the premises to be produced so that any inspecting officer may say, on production of the plan, that gaming or bingo ought to take place in one part and that the other part would be suitable for other social activities. Having said that, I think that it would be possible for the Government to take over the principle of the Amendment and, on Report, bring forward another to give effect to the provisions which I am outlining.
10.0 p.m.
The easiest way in which to make these matters comprehensible is to give one or two examples. I take, first, a


large workingmen's club in a populous area and with a rateable value of, say, £1,050. For bingo purposes, that club would pay a licence fee of £1,000, quite a heavy licence fee, although it would not be so heavy if all the club were being used all the time for bingo purposes. It is unlikely that more than a small part of such a club would, in fact, be used for bingo and it would not be used by day and by night, but probably only by night and on sporadic occasions.
In such circumstances, what would happen would be that the bingo room in that club would be closed down and members who were addicted to bingo—if that is the right term—would seek to play their bingo in some other place. That would be most unfortunate, because it is desirable that bingo should be played on premises and associated with clubs which are under the highest possible management. If I am right in saying that the bingo part of the workingmen's club would have to be closed down because of the size of the licence fee—which would be very much smaller if my apportionment were adhered to—the members of the club would probably go to some undesirable dive operated around the corner.
My second example is connected with a gaming activity. Very strangely, both pontoon and poker dice are set out in the Clause as being gaming activities. I have often taken part in a game of pontoon in my time, and have never regarded it, although it is certainly a game of chance, as a gaming activity. A game of poker dice is often played across the bar of a club and needs very little equipment. Nevertheless, if pontoon or poker dice is played in, say, a small political club with a rateable value of £100, the licence fee for playing those games would be £500. The answer to that would be that the poker dice and pontoon activities in that small club would be closed down immediately, with exactly the same effect—that if members wanted to play those games, they would go to some, possibly rather undesirable, "dive" around the corner.
What I suggest in my Amendment is that at a Conservative or Labour club—and one knows many establishments of this type; and we have all been in both

—where there is a small room where pontoon and poker dice and similar gaming games are being played, only a relatively small rateable value would apply on my apportionment basis. The club would not get away with less than a £500 licence fee, but in a club with a rather larger rateable value, there would be a correspondingly very much smaller licence fee, because the rateable value would be apportioned and the main part of the club which was used for social purposes would not attract the licence fee. Only that part in the plan laid down by the district valuer as being the place where games were played would attract the licence fee.
My next example concerns premises where both games are played. I understand that in and around London there are one or two very large bingo halls, with very much higher rateable values than £3,000, where it is the normal practice that bingo is played throughout an afternoon or evening session, but where, towards the close of the last session, a very small game of chemin de fer, or another gambling game, is played in a part of the premises.
If that small game was played in a part of the premises, the licence fee for the whole of the premises would still be £50,000 a year, because the rateable value of the whole of the premises was more than £3,000, although a very minimal game of the gambling type would have been played on a very small part of the premises.
It has been explained to me that if the Bill's provision are adhered to the organisations concerned would close down the gaming part of the establishment and run it entirely as a very large bingo hall. It would not make a great deal of difference to the organisations, but what would happen would be that the well conducted gaming, run in conjunction with or after the bingo, would be discontinued and the clientele would probably go to some much less-well-conducted establishment occupying premises of a low rateable value around the corner.
I turn, next, to a slightly different combination, the West End club, or the country club. It will be within the knowledge of hon. Members that in West End and country clubs with very large


rateable values there may be a room in which games of, say, backgammon or poker dice are played. The room concerned in both instances would be only a very small part of the club premises, but because rateable values in the West End are high, the clubs would attract a licence fee of £50,000 per annum. It would not be worth while with a licence tee of £50,000 the club carrying on the provision of a small room for backgammon or any small game of chemin de fer at one table. It would mean that the gaming part of the premises would be closed down and if members wished to gamble, again they would go to some very much less-well-conducted club. This is really the point of this Amendment. Without it people may be driven into dubs very much less well conducted.
There is another stray point in connection with the rateable value assessments. It is just possible that a bingo school—they are already organised on Cunard liners—might be organised on such trains as the Brighton Belle or the Manchester Pullman. In those circumstances, as I read this Clause, the rateable value of the whole of British Railways will be taken into account. If my Amendment is accepted there could be an apportionment between the whole of the rateable value of British Railways and the notional rateable value of the Brighton Belle.
I could go on about vessels in similar terms because vessels of all descriptions are treated in exactly the same manner. The main point is that we on this side of the Committee think that for social reasons it would be desirable to have an apportionment made available so that the bingo and/or gaming premises could be notionally apportioned in the rate book as to their rateable values and dealt with separately on the determination of the district valuer.
In those circumstances one will get better conducted premises in which gaming and bingo can take place. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) speaking a few moments ago on his Amendment was perfectly right. What the Government will do if this Clause is persisted in in the way in which it is drafted will be to encourage the absolute maximum use of the lowest rated premises, thereby

encouraging the most undesirable types of gaming.

Mr. Diamond: May I first of all deal with the last point raised by the hon. Gentleman the Member for the City of Chester (Mr. Temple). We ought to get this clearly understood, and it has not been fully understood despite what I said on the last occasion and despite what my right hon. Friend the Chancellor has said. The situation is that we as the Government are responsible for social law. As a Government we are responsible, through the Home Office, for seeing that clubs of this kind are properly administered. On 27th January, 1966, my right hon. Friend the Home Secretary said in reply to a Written Question:
I have under review the law of gaming…but have not reached any final conclusions."—[OFFCIAL REPORT, 27th January, 1966, Vol. 723: c. 100.]
When he has it will be necessary to review the gaming licence duty in the light of new circumstances if and when the social law is changed.
In the meantime nothing that we are proposing in this Bill is in any sense prejudicing the outcome of that review. Everything that we are proposing has been done, as one would expect, in consultation with and with the approval of the Home Secretary. All the present proposals have been prepared in that way. What I want to make clear is that it is completely without foundation for anyone to suggest that we are unaware of our responsibilities as a Government. Purely as a matter of administration the chief responsibility for social law must rest with my right hon. Friend, and we are doing nothing which will in any way prejudice the outcome of his review.
It is quite open to right hon. and hon. Gentlemen to express concern—it would be surprised if they did not—at the present state of affairs. I am stressing this point to make it absolutely clear that nothing that we are proposing in this Clause is in our view likely to result for one second in the worsening of conditions which my right hon. Friend the Home Secretary would naturally be most loath to see.
If what the hon. Member for Chester is alleging is right, my right hon. Friends the Home Secretary and the Chancellor of the Exchequer, together with the Government, are wholly mistaken about the


likely outcome. We do not believe that they are. We have gone into the matter with the greatest possible care. We have all the information available to us which was available to the Opposition. We believe that we have all the practical experience available. We believe, with respect, that we have something in addition on which we can base ourselves, because only the Government can have all the information available.
I am not clear what the hon. Gentleman was devising his proposals for. If he is saying that all premises which are not fully used in the literal sense of not having every room used as a gaming room should be apportioned as to their rateable value, most premises will have their rateable value reduced and the rate at which the tax is charged would have to go up because we want to achieve the same total yield from the tax.
The yield is very small—only £2½ million. If we were to follow the proposal of having the rating valuation of every club apportioned so that we omitted the lounge or restaurant and took account only of the rooms used exclusively for gaming, we should have the result which I have indicated. We should have a smaller rateable value, but we should have to increase the duty scale in order to achieve the same result. That would obviously be of no value, and therefore the hon. Gentleman cannot be pursuing that aim.
If, on the other hand, the hon. Gentleman believes that a working men's club which devotes part of its space incidentally to a modest game of bingo would be forced to shut down because of the rate of duty, he has not directed his mind to all the provisions in the Clause, because in those circumstances there would be exemption. The Clause makes clear that where it is only incidental to the way in which the club is being run there would be exemption. If a working men's club exists for functions other than bingo but incidentally carries on bingo and does not charge more than 6d. for bingo, no problem arises. On the other hand, if somebody operates a club so as to carry on bingo on a full commercial scale, the full commercial charge would be paid. It is on that basis that the Clause is drawn.
The hon. Gentleman himself said that his proposal was perhaps deficient in a technical way. It is deficient in three more technical ways. The hon. Member made his purpose perfectly clear, and the fact that his suggestion is technically deficient in one minor detail or more does not alter the debate in the slightest. We understand what he is getting at. I mention the point only because he raised it himself.
It would, however, be extremely contentious to attempt to decide precisely what part of a hereditament was being used for purposes of or in connection with bingo or any other game "to which this … section applies". Take a proprietor who runs a restaurant at a loss, at a very attractive charge, so that he can encourage people to go from the restaurant into the gaming rooms. Is the restaurant being run for the purposes of or in connection with bingo or any other game? It would be possible to hold the view that it was. The hon. Gentleman's intention may have been to leave it out. It would be hopelessly complicated, very contentious, cause very great difficulty in trying to ascertain the position and would very considerably increase the problems of control. Everybody knows what happens when one attempts to license part of one's premises and the enormous lengths to which one has to go to ensure that it is impossible for a person to move from the licensed part to the unlicensed part.
There would be tremendous difficulty with this, there would have to be large numbers of staff continually inspecting and supervising to see whether there was a breach in the arrangements. It would not work, and there is no need to go into all these problems. The scale of duty is moderate. We will look at it and see how it works out, but I could not possibly suggest any reason why we should encourage the Committee to believe that we would bring forward an Amendment on Committee stage which would go some way towards meeting the point. The present arrangement is a more simple one and a perfectly fair one, and it is not onerous.
I hope that, on considering the matter, the Committee will not press the Amendment.

10.15 p.m.

Mr. A. P. Costain: Having been a member of the Standing Committee on the Bill which became the 1963 Act, I think that we were, out of ignorance, misled as to the effect that Act would have. I support the Amendment, because we now have casinos in the country that many members of the Committee, including myself, did not appreciate that we would get. We now have the crude casino, rather flan the amenity casino which one finds on the Continent. In more fashionable areas and tourist resorts on the Continent, one finds casinos which are the main amenities of towns and where gambling plays only a very small part.
My right hon. and hon. Friends' Amendment would help encourage the development of casinos as part of the general amenities. I cannot accept the right hon. Gentleman's argument that because a restaurant is part of a casino it should be highly rated. Surely if we can get people in such premises who are more interested in eating than in gambling that is something which we need in this country.

Mr. Temple: I admit straight away that the Government have a very highly developed sense of social conscience. It

is a matter of opinion whether our approach would bring about more desirable conditions generally. We think that it would.

We recognise the difficulties inherent in drafting the apportionment procedures to which I have referred, but I do not think that those would be insuperable to Government draftsmen. We think that the Clause as drafted in this respect is not fair, and that it would be made much more fair by an apportionment procedure being incorporated in it.

It is significant that the right hon. Gentleman did not refer to my main point, when I said that members of respectable clubs would be driven out into these undesirable "dives" because, under the terms of their licences, the respectable clubs would have to close down the very facilities which many of their members had been enjoying.

It is for those reasons that we say that our approach is better, and I would advise my hon. and right hon. Friends to divide the Committee.

Question put, That the words "or are comprised in" stand part of the Clause:—

The Committee divided: Ayes 179, Noes 100.

Division No. 25.]
AYES
[10.19 p.m.


Abse, Leo
Davidson, Arthur (Accrington)
Hattersley, Roy


Anderson, Donald
Davidson,James(Aberdeenshire,W)
Henig, Stanley


Archer, Peter
Davies, Dr. Ernest (Stretford)
Herbison, Rt. Hn. Margaret


Armstrong, Ernest
Davies, Harold (Leek)
Hilton, W. S.


Ashley, Jack
Davies, Robert (Cambridge)
Hooley, Frank


Atkins, Ronald (Preston, N.)
Dewar, Donald
Horner, John


Atkinson, Norman (Tottenham)
Diamond, Rt. Hn. John
Houghton, Rt. Hn. Douglas


Bagier, Gordon A. T.
Dickens, James
Howarth, Harry (Wellingborough)


Barnett, Joel
Doig, Peter
Howie, W.


Beaney, Alan
Donnelly, Desmond
Hughes, Emrys (Ayrshire, S.)


Bence, Cyril
Dunnett, Jack
Hughes, Hector (Aberdeen, N.)


Benn, Rt. Hn. Anthony Wedgwood
Dunwoody, Mrs. Gwyneth (Exeter)
Hughes, Roy (Newport)


Bessell, Peter
Dunwoody, Dr. John (F'th & C'b'e)
Jackson, Colin (B'h'se &amp; Spenb'gh)


Binns, John
Edwards, William (Merioneth)
Janner, Sir Barnett


Blackburn, F.
Ellis, John
Jenkins, Hugh (Putney)


Boardman, H.
Ensor, David
Jenkins, Rt. Hn. Roy (Stechford)


Booth, Albert
Faulds, Andrew
Johnston, Russell (Inverness)


Bowden, Rt. Hn. Herbert
Fletcher, Raymond (Ilkeston)
Jones,Rt.Hn.SirElwyn (W.Ham,S.)


Bray, Dr. Jeremy
Fletcher, Ted (Darlington)
Judd, Frank


Brooks, Edwin
Floud, Bernard
Kelley, Richard


Brown,Bob(N'c'tle-upon-Tyne,W.)
Foley, Maurice
Kenyon, Clifford


Buchan, Norman
Forrester, John
Kerr, Russell (Feltham)


Buchanan, Richard (G'gow. Sp'burn)
Fowler, Gerry
Lee, John (Reading)


Callaghan, Rt. Hn. James
Gardner, A. J.
Lestor, Miss Joan


Cant, R. B.
Garrett, W. E.
Lever, L. M. (Ardwick)


Carmichael, Neil
Gourley, Harry
Lomas, Kenneth


Carter-Jones, Lewis
Gregory, Arnold
Luard, Evan


Castle, Rt. Hn. Barbara
Griffiths, David (Rother Valley)
Lubbock, Eric


Chapman, Donald
Griffiths, Will (Exchange)
Lyon, Alexander W. (York)


Coe, Denis
Hale, Leslie (Oldham, W.)
Lyons, Edward (Bradford, E.)


Coleman, Donald
Hamilton, James (Bothwell)
Mahon, Dr. J. Dickson


Concannon, J. D.
Hamilton, William (Fife, W.)
McBride, Neil


Conlan, Bernard
Hannan, William
McCann, John


Cronin, John
Harper, Joseph
MacColl, James


Dalyell, Tam
Hart, Mrs. Judith
MacDermot, Niall




Macdonald, A. H.




McGuire, Michael
Pulley, Walter
Spriggs, Leslie


Mackenzie,Alasdair(Ross&amp;Crom'ty)
Pannell, Rt. Hn. Charles
Stonehouse, John


Mackenzie, Gregor (Ruthergien)
Pardoe, J.
Thomas, Iorwerth (Rhondda, W.)


Mackie, John
Pearson, Arthur (Pontypridd)
Thorpe, Jeremy


Maclennan, Robert
Perry, Ernest G. (Battersea, S.)
Tinn, James


McNamara, J. Kevin
Perry, George H. (Nottingham, S.)
Tuck, Raphael


MacPherson, Malcolm
Price, Christopher (Perry Barr)
Urwin, T. W.


Mahon, Peter (Preston, S.)
Price, Thomas (Westhoughton)
Wainwright, Edwin (Dearne Valley)


Mahon, Simon (Bootle)
Price, William (Rugby)
Wainwright, Richard (Colne Valley)


Mapp, Charles
Probert, Arthur
Walden, Brian (All Saints)


Marquand, David
Rankin, John
Walker, Harold (Doncaster)


Mellish, Robert
Roberts, Albert (Normanton)
Watkins, David (Consett)


Millan, Bruce
Roberts, Goronwy (Caernarvon)
Wells, William (Walsall, N.)


Miller, Dr. M. S.
Roberts, Gwilym (Bedfordshire, S.)
Whitaker, Ben


Mitchell, R. C. (S'th'pton, Test)
Robinson,Rt.Hn.Kenneth(St.P'C'as)
White, Mrs. Eirene


Morgan, Elysian (Cardiganshire)
Robinson, W. O. J. (Walth'stow,E.)
Whitlock, William


Morris, Charles R. (Openshaw)
Rodgers, William (Stockton)
Willey, Rt. Hn. Frederick


Moyle, Roland
Rose, Paul
Williams, Alan (Swansea, W.)


Murray, Albert
Ross, Rt. Hn. William
Williams, Alan Lee (Hornchurch)


Noel-Baker,Rt.Hn.Philip(Derby,S.)
Rowland, Christopher (Meriden)
Williams, Clifford (Abertillery)


Oakes, Gordon
Rowlands, E. (Cardiff, N.)
Willis, George (Edinburgh, E.)


Ogden, Eric
Ryan, John
Winnick, David


O'Malley, Brian
Sheldon, Robert
Winstanley, Dr. M. P.


Oswald, Thomas
Shore, Peter (Stepney)



Owen, Dr. David (Plymouth, S'tn)
Silkin, John (Deptford)
TELLERS FOR THE AYES:




Mr. Lawson and Mr. Bishop.




NOES


Alison, Michael (Barkston Ash)
Hall, John (Wycombe)
Nott, John


Astor, John
Hall-Davis, A. G. F.
Pike, Miss Mervyn


Batsford, Brian
Harris, Frederic (Croydon, N.W.)
Pink, R. Bonner


Biffen, John
Hastings, Stephen
Pym, Francis


Blaker, Peter
Hawkins, Paul
Roots, William


Boyd-Carpenter, Rt. Hn. J.
Heald, Rt. Hn. Sir Lionel
Rossi, Hugh (Hornsey)


Braine, Bernard
Heseitine, Michael
St. John-Stevas, Norman


Brinton, Sir Tatton
Higgins, Terence L.
Scott, Nicholas


Bruce-Gardyne,
Hiley, Joseph
Sharpies, Richard


Buck, Antony (Colchester)
Hirst, Geoffrey
Shaw, Michael (Sc'b'gh &amp; Whitby)


Carlisle, Mark
Hogg, Rt. Hn. Quintin
Sinclair, Sir George


Cary, Sir Robert
Holland, Philip
Smith, John


Chichester-Clark, R.
Hordern, Peter
Stodart, Anthony


Clark, Henry
Howell, David (Guildford)
Stoddart-Scott, Col. Sir M. (Ripon)


Clegg, Walter
Hunt, John
Summers, Sir Spencer


Corfield, F. V.
Iremonger, T. L.
Taylor,Edward M.(G'gow,Cathcart)


Costain, A. P.
Jenkin, Patrick (Woodford)
Taylor, Frank (Moss Side)


Crosthwaite-Eyre, Sir Oliver
Jopling, Michael
Temple, John M.


Crouch, David
King, Evelyn (Dorset, S.)
Thatcher, Mrs. Margaret


Cunningham, Sir Knox
Lloyd, Ian (P,tcm'th. Langstone)
Turton, Rt. Hn. R. H.


Dean, Paul (Somerset, N.)
McAdden, Sir Stephen
Vaughan-Morgan, Rt. Hn. Sir John


Deedes, Rt. Hn. W. F. (Ashford)
MacArthur, Ian
Vickers, Dame Joan


Digby, Simon Wingfield
Maclean, Sir Fitzroy
Walker, Peter (Worcester)


Elliott, R.W.(N'c'tle-upon-Tyne,N.)
Macleod, Rt. Hn. lain
Ward, Dame Irene


Eyre, Reginald
Maddan, Martin
Weatherill, Bernard


Galbraith, Hn. T. G.
Maxwell-Hyslop, R. J.
Wells, John (Maidstone)


Gibson-Watt, David
Maydon, Lt.-Cmdr. S. L. C.
Whitelaw, William


Giles, Rear-Adm. Morgan
Mills, Stratton (Belfast, N.)
Wills, Sir Gerald (Bridgwater)


Gilmour, Sir John (Fife, E.)
Miscampbell, Norman
Wilson, Geoffrey (Truro)


Glover, Sir Douglas
Monro, Hector
Wolrige-Gordon, Patrick


Goodhart, Philip
Morrison, Charles (Devizes)
Worsley, Marcus


Grieve, Percy
Murton, Oscar
Younger, Hn. George


Griffiths, Eldon (Bury St. Edmunds)
Nabarro, Sir Gerald



Gurden, Harold
Neave, Airey
TELLERS FOR THE NOES:




Mr. More and Mr. Grant.

Mr. Iain Macleod: I beg to move Amendment No. 130, in page 15, line 26, to leave out "backgammon".

The Chairman: I think that it would be for the convenience of the Committee to take, at the same time, Amendment No. 131, in line 27, leave out "crown and anchor", and Amendment No. 146, in Schedule 2, page 64, line 15, at end insert:
(d) for the issue of a certificate by the Commissioners to the secretary of a, club (or per-on performing the functions of secretary) that notwithstanding the provisions of section 2 of this Act no gaming licence shall be required for the aforesaid club.

Mr. Macleod: That would be convenient, Sir Eric. I shall be brief because I have, as it is said, reason to believe that I shall get a reasonably sympathetic hearing.
This is a more important point than might at first sight appear and I must explain it, although I will take only a moment or two to do so. I am sure that I know how this situation arose. In the 1963 Act—I was a member of the Government at the time—we either made a mistake or left a loophole, because we had a Section which was entitled "Saving for clubs". That was done on the assumption that if a person paid an ordinary subscription, and paid table money for tolerable stakes, it was not a particular offence if people took part in gaming.
In the definition Clause of that Act, "gaming" means "the playing of a game of chance for winnings in money or money's worth". In other words, if you play for a box of matches or something like that, in theory at least one is gaming. The "Saving for clubs" Section in the 1963 Act unquestionably opened the way to a vast flood of gaming activities, far beyond what the Government of the day thought was going to happen at the time, and the present Government have chosen an entirely different method of trying to cope with this.
The problem is that what they have done has created new anomalies of its own, and all these attractive games in subsection (5) now become games for

which one may require a gaming licence of £50,000, if the game is played in premises with a reasonably high rateable value. Quite clearly, if one looks at some of the games in subsection (5) that is nonsense.
I have pinned my argument on backgammon, because—I have argued this point in a column in the Daily Mail, which I know is required reading for members of the Government, so I need not expand on it at any length—it is a Royal game and was always a legal game, even in the days when lots of other things were illegal. But if one plays a simple game of backgammon in a club, then one is liable under this Clause, if it is unamended, to pay either £500 or £5,000 or £50,000, according to the rateable value of the premises.
I merely want to draw attention, very briefly, to one or two other possibilities. I have put crown and anchor into my Amendment, as a game for which it seems ludicrous to ask for gaming licence duty, but I do not intend to press that particular Amendment.
The other situation which I ask the Financial Secretary to note and to give me, shall I say, an "off the cuff" answer now, and perhaps to look at it before the Report stage, is the situation in relation to playing games of chance on trains. I know that people think, first of all, of the three card trick, which I can do with great skill, but the point is that many of our constituents every day, travelling to and fro, have a school of pontoon or whatever it may be, in a train. The definition of "premises", on page 19 of the Bill, "includes any place whatsoever and any means of transport".
I do not know what the rateable value of a train is, but I think I am right in saying that all British Railways is rated as one, and therefore, presumably, in theory all trains would have to pay £50,000 if anybody played pontoon or vingt-et-un on them. This is the sort of point about which we must not legislate, but in my submission the Bill, at the moment, says exactly that.
So what I suggest to the Financial Secretary, very briefly, is that backgammon, which quite clearly is a game of


skill, should not be included in subsection (5) at all. I think that there is a similar argument about crown and anchor. I am surprised to see poker dice there and not poker, because—and if the Committee will forgive me, this is an expert witness testifying, at least on this particular point—backgammon is more a game of skill than is poker, and poker is more a game of skill than is bridge. There is no question in my mind that this is so. This proposal, as it is, leads to so many absurdities that I would ask the Financial Secretary to accept my Amendment No. 130, and to think about the problems in relation to trains and other forms of transport.
I should like to say one word about my Amendment No. 146. It was really my solution to this problem that the Commissioners could issue a certificate to the club, and in spite of Clause 12 no licence would be required. I can understand the difficulties of being flooded with applications, and so on, but, all the same, I think that something like Amendment No. 146 would strike the right balance between the 1963 Act, which, clearly, went too far in one direction, and Clause 12 of the Bill, which clearly, in trying to correct that, has gone too far in the other direction.

Mr. Sheldon: I wish to speak on Amendment No. 130. If I can claim to be an expert on anything, it is on backgammon. It is 20 years since I was introduced to this game by the father of the young lady who was subsequently to become my wife, and with the single-mindedness which only the young really possess I devoted myself to the mastery of this game to assure myself of the welcome that I was always to find there. My interest survived the initial ordeal and I subsequently became a devotee of the game. From that day till entering this House I regularly played several games each week.
This game has a very honourable history. It was known as trictrac by the Romans and even before that, for it goes back to 3,000 B.C. The Emperor Diocletian, in the years 290 to 300 A.D., played this game regularly. It was very dangerous to beat the Emperor. If one did so, one was likely to be without one's

head the next day. We are, of course, much more civilised now.
If it was a pure game of chance, the person who played the Emperor would be unable to lose. If there was only a little skill as when playing an ordinary game of cards, the Emperor Diocletian, wise man that he was despite this one failure in his make-up, would not have had the satisfaction of appearing to beat his opponent.
I rate the skilfulness of this game somewhere between whist and bridge, and in some of its many variations probably coming very near to the skill shown in the game of bridge. I would willingly give odds of three to one against anybody beginning this game and substantial odds to beat anyone who considered himself an expert in it. This game should not have been included in this list. It is obviously a mistake and I look forward to the Amendment being accepted.

Mr. MacDermot: May I deal, first, with the game of backgammon, which has been dealt with in so interesting a fashion by hon. Members on both sides of the Committee. May I explain how it came to be included in the list? It is, of course, to be distinguished in this list as being a game which, normally speaking, is clearly a game of skill. The reason for its inclusion is that it is a game which is quite widely played in casinos, and played in such a way that I do not think anyone would regard the outcome as depending upon skill because the practice, I understand, is to double up the stakes each time. It does not matter how skilful almost any card game may be; if one plays it in that way the outcome will depend on chance rather more than on skill.
I was fascinated and delighted to hear the right hon Gentleman express the view that poker is a game of greater skill than bridge. That is a view that I have always held, because when I play bridge it is a game of pure chance. I am glad to say, however, that I have won more money at poker than I have lost. It is for this reason—because it is played in this way in casinos—that it was included in the list, the intention being to list all games which are generally played as gambling games in casinos.
There are many clubs where games like poker and bridge are played and which are not in the list, and where backgammon is played for stakes. It would be wrong to include such clubs within the purview of the law. If we left in backgammon the members of the club would cease to play it rather than pay the duty. For this reason, I advise the Committee to accept the Amendment dealing with backgammon.
I cannot be so helpful about crown and anchor. I do not know the game, but I am advised that it is a genuine game of chance, which is widely played as a form of dicing in casinos, and is properly in the list. There is power in the Bill to alter this list, if need be. As new games and new fashions come into being in gambling we can add to the list.
This is not a new problem. I have had my attention drawn to a Statute of the time of Henry VIII, an Act for the maintaining of artillery and the debarring of unlawful games. In those days, as now, one of the chief problems was to raise revenue for the maintenance of the Armed Forces. Then the problem was the maintenance of a large force of skilled archers, and this Act—33 Henry VIII, c. 9—reinforced provisions made earlier In the reign for the protection of archery. Unfortunately,
divers and many subtil inventative and crafty persons, intending to defraud the same estatute, sithens the making thereof, have found, and daily find many and sundry new and crafty games and plays, as logetting in the fields, Slidethrift, otherwise called Shove-groat … by reason whereof archery is sore decayed.
We have profited by that lesson and have taken powers accordingly. We are content to start with backgammon.
The right hon. Gentleman raised the question of trains. There is a serious aspect to this matter, which is that it has become the practice—and may increasingly become so—to fit out trains specially for the purpose of playing bingo on a commercial scale. The trains ply to and. from seaside resorts in the summer months. There is no reason why these should be excluded. It does not become necessary to assess the rateable value of the entire British Railways, because these trains will be premises falling within the first category in the table set out in the Clause. They will come within the words

Premises other than", taken with the two exceptions stated in the passage.
The liability to duty for such a train will be £100, chargeable on the train. The train will be the premises. We do not envisage any attempt being made to levy duty for casual passengers who play a game of pontoon in the train, whether from my constituency or that of any other hon. Member, when going to London or elsewhere. That is not what the Bill is aimed at.
Finally, the right hon. Gentleman, in referring to his other Amendment, suggested that we should take power to issue a certificate exempting a club. This is a power which we do not need and do not want. One of the reasons why we do not want it is that if we had it we should be simply plagued with applications to exercise it from a host of people.
If we draw this rightly, as, I hope, with the assistance of hon. Members in the Committee we are doing, we shall define rightly the kind of premises in respect of which the duty should be levied, and if any exceptions are to be made we think that they ought to be embodied properly in the Act and not be in the form of a discretionary power in the Commissioners.

10.45 p.m.

Mr. Iain Macleod: I am grateful to the hon. and learned Gentleman for the point about backgammon. I accept what he says, that it is not the intention to penalise people. Nevertheless, this is what the Bill says at present. Having drawn attention to the anomaly of the train, I feel that a train fitted out for gaming should be properly taxed.
Not arguing about that for the moment, I feel that it is a pity if the House of Commons is to pass an Act which will say, even though the Customs and Excise will not enforce it, that various innocent citizens carrying out a fairly normal activity are, nevertheless, guilty of an offence.
I understood the hon. and learned Gentleman to say that he will look again at what I might loosely call the train point before Report, and I am content to accept his backgammon point and leave the crown and anchor point there.

Mr. MacDermot: I will look at it further. I have already looked at it, and there is real difficulty here. If any hon. Member has a constructive suggestion to make, I shall be glad to consider it. One would seek to find some wording which would effectively exclude casual playing. There might be a group of workers in the lunch hour on a building site who bring out dice and play. The provision is not aimed at that. Technically, one could say that it was within the wording of the Clause. But we are not concerned with that. The difficulty is to find wording which would exclude that activity, but would not create the loophole to which the right hon. Gentleman referred with the notorious effect of the club exception in the earlier legislation.

Amendment agreed to.

Question proposed, That the Clause, as amended, stand part of the Bill.

Sir Lionel Heald: Can we be assured that, if bingo or any other game of this kind were proposed to be carried on in the Palace of Westminster, there would be no restraint on it?

Mr. MacDermot: No restraint whatever is imposed under this Clause on anyone carrying on any kind of gaming activity. If they do it in certain ways, they may become liable to pay a duty.

Mr. Rees-Davies: Provided that Clause 12 remains with us only for one year, all right, but what is wrong with the Clause can be stated very briefly, in four points.
First, it sets out a whole range of activities every one of which one can drive a coach and horses through. There are at present no fewer than a dozen games that I can think of—I will not list them now—not incorporated in the Government's list, which are being played in casinos. Secondly, there is not a lawyer in the Committee who does not know that it is accepted practice never to plead betting games in an Act of Parliament. I shall not elaborate on that, because we know it to be true. We debated it on the Betting and Gaming Bill, and we debated it on other Bills. Thirdly, it is evident that we will have to license gaming houses, and when we do we will have to provide adequate supervision by way of a gaming commission or by some other method.
When we do that, we shall be able to provide proper taxation along proper lines. This is a chaotic Clause. It is so bad that I did not bother to put down Amendments to it. It is quite unsatisfactory in its present form. It provides that the small gaming houses can continue without improvement. This is bad for tourism, because it means that there will be every advantage to the small gaming houses to bloom. There will be every disadvantage to the first-class places which are being established for the benefit of this country.
I say no more. We have had a good innings, but I hope that between now and next year the Chancellor will have careful and constructive talks with the Home Secretary, who I know is considering this, and we will by then have proper legislation to license gaming houses in the proper manner, and to provide adequate and proper supervision, not through the police, but through other channels. I hope that by next year we will have on the Statute Book a provision which will provide proper control for gaming houses; a provision which will be supported by the Church, by the gaming houses themselves, and by the tourist industry, and which will enable us to tax gaming houses in the proper manner.
I am sorry to have delayed the Question being put, but I hope that next year we can come back and get on with a proper job, in a proper manner, which will be worthy of the House of Commons.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 13.—(GAMING MACHINE LICENCE DUTY.)

Mr. J. Bruce-Gardyne: I beg to move Amendment No. 177, in page 16, line 10, after "licence", to insert
which expression shall except where the context otherwise requires, include a half-year's gaming machine licence".
At this point we move from the rarified atmosphere of the historical background of backgammon and crown and anchor to the more mundane subject of the "one-armed bandit".
I suspect that the "one-armed bandit" has few friends on either side of the Cormmittee—[HON. MEMBERS: "Oh."] I am delighted to hear from some of my hon. Friends that it has. I was going on to say that perhaps many of us have "shaken its hand". I have no personal interest to declare, because whereas I have on occasion won money at backgammon, I have never succeeded in winning any- thing from a "one-armed bandit".
The purpose of the Amendment is to call attention to the position of a club or other institution where a "one-armed bandit may be installed, but where, by the nature of the activity which is carried on by that club, the machine is liable to be used only for a seasonal period. I suggest that in this case we are dealing with what might be called a "half-armed bandit", rather than a "one-armed" one.
I want to explain an individual case which was drawn to my attention, which I think brings out very clearly the purpose of the Amendment. I had a visit last weekend from one or two of my constituents who are officials of a bowling club at Monifieth, in my constituency. They pointed out that they were extremely worried about the effects of the Bill on their finances.
They have a membership of 68 men End about 34 women. The women do not pay the full subscription, but they do not enjoy the full facilities. They had to in- crease their subscription last year by £1, because of rising costs. About 30 per cent. of their members are old-age pensioners, and they were afraid that if they had to increase the subscription further many of the members would leave and the club would have to close down.
They felt that they would be badly hit by the Selective Employment Tax, which we shall be discussing later, and also drew my attention to the predicament they were in over the gaming machine or "one-armed bandit" which they have recently installed. The income from this machine is about £5 a week. This is divided—I believe that this is the normal arrange- ment—between the owner, the lessor of the "one-armed bandit", and the club, providing £2 10s. a week each.
As I am sure the Financial Secretary will appreciate, a bowling club functions only during the summer, and in

my constituency it would be unlikely to function for more than six months in a year. The result is that the gross income from the one-armed bandit at £5 a week could not possibly exceed a maximum of £65 a year each for the owner of the machine and the club. Clearly, if the owner of the machine has to pay a £75 licence fee, he will take the machine away. This would be a blow to the finances of the club which, facing as they do the other consequences of the Government's fiscal policy, they simply could not meet.
They put it to me that it was not unreasonable that, in the case of a gaming machine, as in the case of a car or a game licence, it should be possible to obtain a licence for less than a year at a reduced fee. That is the simple purpose of the Amendment—to provide that, where a gaming machine will be used for only six months in the year, the licence fee should be part of the full licence fee as stated in the Clause 13.
I have cited the case of a bowling club, because that was the case represented to me by my constituents, but this applies, as I am sure the Financial Secretary appreciates, to many other clubs of that type. I have had drawn to my attention the case of cricket, football, ski-ing and sailing clubs and any institution which, by the nature of its activities, operates on a seasonal basis through the winter or the summer. I am sure that many hon. Members would be able to add to the list.
I am told that the Amusement Trades Association claims that it has a list of 57 clubs in the area of Surrey, Sussex, Kent and Essex alone, which run machines from which they cannot expect to have takings of £75 over the season, and each of which is liable to be withdrawn. As I said, provision is made for seasonal game licences for three months and for car licences for four months and it seems not unreasonable that gaming machine licences should be available for half a year.
I hope that I have said enough to explain the purposes of the Amendment and to give the Financial Secretary an idea of the thinking behind it. I hope that he will be able to offer us some satisfaction on this matter.

11.0 p.m.

Mr. MacDermot: As has already been made clear a number of times in our debates, we are very anxious to keep the administration of the new measures as simple as possible, and do not want to have a vast army enforcing them.
We are asked in the Amendment to make a special concession which would operate in favour of small clubs. The reaction of anyone at first sight, and particularly when first hearing the matter so forcefully argued as it was by the hon. Member for South Angus (Mr. Bruce-Gardyne), is, naturally, to feel sympathetic towards it. But there are other aspects to this.
A half-yearly licence at half rates is proposed. A number of seasonally operated fruit machines are operated only for a few months in the year, but they take considerable sums of money. I think particularly of those at seaside resorts.
It would be anomalous to grant a licence on which only half the duty was paid in respect of such a machine, whereas the full duty would be paid for another machine in a club operated over the whole year with far lower takings. This immediately shows the sort of anomaly that one gets into as soon as one tries to adjust the law to meet a hard case.
We have had the position of small clubs very much in mind, because we know that a large number of sporting and other clubs have the machines, and that they are a valuable source of revenue for the clubs. We are aware that their takings are often rather low, and this is one of the main reasons why we have pitched the rate of duty as low as we have, at £75 a year.
We have been criticised for that by many people, who have said that the duty should have been higher and that many machines are taking sums that could have borne a very much higher rate. But we were determined on a flat rate, because the duty must be simple and easy to administer. Therefore, we had to select a rate that would enable the great majority of the machines to continue to be used.
The odd social club may not find it worth while to take out a licence, but I

do not think that there are nearly as many as the hon. Member for South Angus suggests. For example, he quoted the case of a person who hires a machine to many different clubs within a year, none of which would be able to bear a duty of £75. The answer is that none of them would have to do so, because the man who hires out a machine pays the one duty in respect of a particular machine. All that is required is that over the year the takings at one premises shall be sufficient to pay the duty.

Mr. Bruce-Gardyne: I think that the Financial Secretary has misunderstood what I said. The 57 clubs in the South-East which I quoted are not, as I understand it, hiring from one person. They are each hiring a machine on which a licence will have to be paid.

Mr. MacDermot: Where there is seasonal use of machines, the partial solution may be for the owners, where machines might be moved from a summer to a winter site, to share the burden of the duty. There is no reason in principle why an exception should be made for small clubs, once we accept that it is right to impose a duty upon the machines.
When the clubs are deciding whether it is worth while and profitable to them to operate a machine, they will have to take the duty into account. There is no concession in other spheres of duty for small clubs. If, for example, they obtain a club licence, they must pay the same as a publican pays for his licence. They must also pay the same duty on the beer which they sell.
It might be much more profitable for them if they were exempt from those duties, but there is no such exemption. We do not feel that we can go any further than we have done to meet the small clubs, and we have gone a very long way to meet them by pitching the duty as low as £75 a year.
We know that there are many small clubs which have takings as low as £100 to £150 a year, and with the duty at this rate it would still be worth their while to operate the machines. We do not feel that we can lower the duty.

Dr. M. P. Winstanley: I am anxious to understand the hon. and learned Gentleman clearly. Did I


understand him to say that, where a fruit machine is moved from one club to another, the different clubs can make some arrangement about the licence? That would appear to suggest that it is the machine which is licensed. Is the Financial Secretary therefore saying that in the case of any individual "one-armed bandit", or fruit machine, the machine will have to bear duty only once per year, irrespective of where the machine happens to be placed from time to time? In other words, are there circumstances in which more than one licence would have to be obtained for one machine?

Mr. Ian MacArthur: While the Financial Secretary is considering that ingenious point, may I ask him to give further thought to this whole question? I appreciate that there is no force in the argument that a lower rate of duty should be paid in respect of "one-armed bandits", or fruit machines, in seaside clubs or piers because of the seasonal nature of the seaside resort.
What my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) and I have in mind is something quite different. My hon. Friend and I represent constituencies consisting mainly of small communities with small clubs, many of which depend for some part of their revenue on a "one-armed bandit". I recognise that there are objections to introducing Amendments which would lead to abuses and anomalies, Cut I believe that there is a simple way of solving this problem which would meet a very large part of the case advanced by my hon. Friend. The concession should be related to clubs wholly or mainly engaged in sporting pursuits. A form of words was devised to meet this case in the Licensing (Scotland) Act, 1959, and it eased many sporting clubs in Scotland. A procedure of this kind could well avoid anomalies and it would be completely fair.
I appreciate that in some cases the duty of £75 may appear to be low. However, for small clubs of the type my hon. Friend and I have in mind this figure is very high. Seventy-five pounds represents an enormous amount of playing on a machine. I have made some calculations showing that the raising by

a small club of the £75 necessary to pay this duty would be beyond any reasonable expectation. To raise £75 requires the clearing of 3,000 sixpences. There is one popular model of this machine which on average pays back three sixpences for every four sixpences played. This means that 12,000 sixpences have to be played through the machine for 3,000 sixpences, or £75, to be cleared to pay the duty. In addition, the small club has to pay a very large price to have the machine.
It is unlikely that a small club of the type which my hon. Friend mentioned would buy a machine of this type outright, because these machines cost hundreds of pounds. They are much more likely to rent those with a rental and share the cost based on one. Sharing the cost on a 50/50 basis is a popular method. In a case of that kind the number of sixpences to be played to pay the rental and the £75 would be 24,000. In the case of a bowling club, which, in Scotland, has a bowling life of about six months in the year, this represents 4,000 sixpences per month, or 1,000 shots at the machine a week. Obviously, this is far beyond the possible expectation of a small club with 100 members or so, which is typical of these small sporting seasonal clubs in Scotland, and, I am sure, in many parts of England and Wales.
I hope that the hon. and learned Gentleman will consider this sympathetically and investigate the possibility, at a later stage, of providing some relief to clubs of this kind.

Mr. MacDermot: To deal, first, with the point raised by the hon. Gentleman the Member for Cheadle (Dr. Winstanley), may I confirm what I said before, which is that it is open to the owner of a machine which is being used only seasonally on one set of premises to arrange to transfer the licence if he makes arrangements with another club operating during another season. He will find the relevant provision in part II of paragraph 10 of the Second Schedule, which gives power to:
The proper officer … in such manner as the Commissioners may direct, and without any additional payment—
(a) transfer a gaming licence in respect of any premises to a successor in title to


the interest in those premises of the person to whom the licence was granted;
Or
(b) amend a gaming machine licence by substituting different premises for those in respect of which it is for the time being in force.
In the majority of cases, the type of clubs with which we are concerned would not be the owners of the machine. They would be hiring it and in such cases the licence would be taken out in respect of particular premises by the company hiring it out. If it is only hired for six months, the company can arrange for the licence to be transferred to another set of premises, to which it will hire the machine for another period. In this way we would only be recovering one set of duty in respect of one machine for one year. This may assist a number of these small clubs, who would otherwise not find it advantageous to have one of these machines, to continue to do so.
The Committee will readily realise that if we are to tax these machines at all one will always find the case of a small club, at whatever level one fixes the duty, saying that it was once worth its while having one of these machines, but it is no longer, as a result of the duty. If we go on pitching the duty lower and lower we will not find a solution because it will only mean that there will be another group of clubs coming forward saying that they were affected.
One has, first of all, to try to find out what is the right level. We think that £75 is a modest and generous level, aimed at helping the great majority of clubs. Then comes the suggestion, "Why not exempt the deserving cases altogether." Once one does that one is running into trouble, because one has to have a system for defining criteria for clubs which are to be exempted and one has to scrutinise their applications and have appropriate machinery for doing this. I predict that one would not be able to avoid the sort of difficulties encountered in relation to entertainments when it was proposed to set up exemptions by reference to the aims and objects of a club.
Much as I sympthise with the suggestion made by the hon. Gentleman, I would be misleading him if I were to

suggest that between now and Report stage I could find a solution to this. It is an idea which occurred to me, too, as soon as I looked at the matter, because one has sympathy with the problem and knows that it exists. I have looked into it, but I must advise the Committee that I cannot find any solution which would meet the case and leave a workable scheme. If any hon. Gentleman has a further suggestion to make and cares to write to me between now and Report, I shall gladly look at it; but I do not think that it will be easy.

11.15 p.m.

Mr. Percy Grieve: I support the Amendment. I am convinced that the Financial Secretary has sympathy for the motives which prompt this proposal. If I may say so, I have known him in other capacities over a great number of years, and I am sure that he has great sympathy with the small clubs here involved, which are likely to suffer considerably as a result of having to pay an annual licence fee for one of these machines.
As I understand it, the difficulty which the hon. and learned Gentleman sees in the way of accepting this Amendment, or something similar, is that it would lead to administrative complications and that more staff would have to be employed for the purpose. Is this really so? Will it be so much more difficult in the case of the small local clubs to provide for a half-yearly licence than to provide for an annual licence? I very much doubt that any greatly increased staff would have to be taken on to issue half-yearly rather than annual licences.
Although there are very many of these machines in use in small clubs throughout the country, I greatly doubt that, in proportion to the whole cost of administering this new tax, such a change would cause a much larger staff to be taken on. I urge the hon. and learned Gentleman to reconsider his attitude towards the Amendment between now and Report.

Mr. Frank Taylor: I reinforce the proposal that we should give seasonal alleviation to these clubs. There is a real case for it generally, and particularly in the sporting world, because most sports are seasonal and clubs have an off-season. It is not relevant to say that some clubs at the seaside make a lot of money out of these


machines in the summer and go on to argue that this is a reason for killing off a lot of smaller clubs. That is no more relevant than to point out that one club may make £2,000 out of a machine whereas another may make only £100 in a whole year. The seasonal aspect of the matter is important and should be given full weight.
We ought to tax these machines very much as we tax motor cars. We tax the car, not the owner or the user. There seems to be no reason why we should not proceed in that way in this case. It would save on administration if each machine had a taxation licence plate on it. If one were found without a licence, the law would be broken and one could proceed against whoever was using it. In that way, we could achieve our objective at very little expense, certainly much less expense than the procedure now proposed of finding the machine and then trying to trace the owner and starting action against him.
The six months' licence fee, which could be a little more than half the annual fee, perhaps, would serve the purposes urged by all speakers in the debate and it would be generally fair all round. I ask the Government to accept the proposal.

Mr. Robert Cooke: I shall not cover again the arguments already deployed lit favour of giving special treatment to the smaller and more modest clubs. I quarrel with
something which the Financial Secretary said in his last speech but one. I think that the hon. and learned Gentleman used a bad analogy when he compared this with the liquor licensing provisions of the clubs and public houses. He said that the clubs and "pubs" were on all fours in that matter, but surely that is not so. He drew a bad parallel, because clubs do not face anything like the rigours which "pubs" have to face in liquor licensing. I think that they do not even have to pay the same amount of money for their licences and certainly they do not have to provide anything like the high standard of facilities to do with the sale of intoxicating liquor.
I hope that the hon. and learned Gentleman will answer that and perhaps reconsider, as clubs and "pubs" are not

on all fours, whether there is a case to be answered when my hon. Friends have been pressing for special treatment for clubs in the matter of licensing these gaming machines.

Mr. Costain: As a rule, there is a limited use of small sporting clubs. A cricket club, for instance, may be used only on a Saturday. When the hon. and learned Gentleman referred to Schedule 2, I gathered that he was saying that these machines were licensed rather like motor cars. If so, surely it would be advantageous for the cricket club, which was only on Saturdays, to arrange with another club, which was shut on a Saturday, to use these machines.
There would be a further benefit which should appeal to the Chancellor, who must have been extremely alarmed when it was revealed in a Written Answer that £4 million was spent in foreign currency on buying these machines. If we could get the maximum use from the available machines, we should not only save cash which would otherwise be spent on their import, but give an advantage to the Chancellor if the taxation system for the machines encouraged their maximum use.

Mr. Rees-Davies: There are two points. First, is it clear that the licence attaches to the machine?

Mr. MacDermot: On the premises.

Mr. Rees-Davies: If one company has a business over half the country and another company has the business over the other half, if the machine is licensed, it could be "let", if I can use that term, to Margate in the summer for six months and Peterborough for the winter.
Secondly, there are two different types of machine. That used in the clubs takes roughly 20 per cent. and is a gaming machine. It has a jackpot which produces substantial sums of money. The other machine is the "pub" machine which was specially designed as a result of opinion from counsel. That takes only 10 per cent. of the take and is only an amusement machine. It gives 2s. 6d. or 5s. tokens which have to be spent in the public house on cigarettes, sandwiches or beer.
There ought to be a different price for an amusement machine in a "pub", which should be taxed at one price because it gives very little return. The average return which it gives to a public house is a net profit of about £45 a week, which is divisible three ways, between the operator, the licensee and the publican. It is used very largely as an amenity. A machine at a club is used to make a profit for the club, and it gives a very much bigger return.
The loophole which the Treasury appears to have overlooked is the difference between the machine which is of an amenity nature for the public house—the machine which is specially designed and produced for the public house—and those designed for clubs.
I have some connection with the tourist trade myself, and I do not regard the £75 as unduly high. It is perfectly reasonable. I agree entirely that it is important that it should be possible only to hire for three months in the summer. If the duty attaches to the machine so that clubs in the tourist resorts can hire them for three or six months only, it is reasonable. However, if they are compelled to pay a licensing fee of £75 for 12 months when they only require the machine for three, it will be quite wrong.

Mr. Iain Macleod: The speech by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) has helped the Committee considerably. I do not know what attitude my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) intends to take. The Financial Secretary has been sympathetic to the point and has given a sympathetic answer. It is a very difficult problem. The short situation is that for many "one-armed bandits", £75 is very little. For many others, it is a vast amount of money. That is the problem, and I understand the difficulties.
However, if I understood the Financial Secretary aright, he said that, without any commitment at all, he would look at the position between now and Report stage. Possibly we could do the same and, in the light of discussions, see if we can come up with a helpful answer on Report. Perhaps on that, my hon. Friend might be willing to withdraw the Amendment.

Mr. MacDermot: I agree that the hon. Member for the Isle of Thanet (Mr. Rees-Davies) made a very helpful speech. I quite agree with the way in which he summarised the point that I sought to make in answer to his hon. Friends.
The machine in the "pub", if it is purely an amusement machine, will probably find exemption under subsection (2). If it is an amusement machine, it may not get by under that, and it is presumably there because the publican finds it to his commercial advantage to have it there. In those circumstances, I do not see any reason why there should be a lesser duty.
I agree with the right hon. Member for Enfield, West (Mr. Iain Macleod) that I approach the general subject with sympathy. I have already sought to see whether I can find a solution to the problem. I have failed, and I have given reasons why the proposals that have been made appear to me to be unacceptable. But I will gladly look further, and I will more gladly welcome suggestions from other hon. Members.

11.30 p.m.

Mr. Bruce-Gardyne: I am grateful for the rather limited assurance that the Financial Secretary has given. I am bound to say that I found that the arguments in his first reply were not very impressive, particularly the argument that a "one-armed bandit" at a seaside resort might be much more heavily used than one which was used throughout the year in a place which was not a seaside resort. Surely that is equivalent to saying that in certain cases a car which has a four-month licence taken out on it might be expected to be used more than one with a year's licence.
Any level which we fixed for a licence would be bound to leave some people in a position where they could not operate profitably. I accept that. But I am not seeking to query the level fixed in the Bill. I suggest that there could be and should be a half-year level.
I am grateful to my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) for the points he has made. The point made by the Financial Secretary about the possibility of transferring the licence might be of assistance in certain cases, although I doubt whether it would


assist a case like that put to me by my constituents.
The Financial Secretary said that the Government wanted to keep legislation simple. Coming from a Government
which produced last year's Finance Bill and this year's Selective Employment Tax, that leaves me gasping. All I can say is that I hope that the Financial Secretary will look at these points again carefully before Report. On that basis, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

Orders of the Day — Schedule 2.—(SUPPLEMENTARY PROVISIONS AS TO DUTIES RELATING TO BETTING AND GAMING.)

Mr. William Roots: I beg to move Amendment No. 149, in page 63, line 43, to leave out or enforcement".
The Amendment refers to paragraph 18 of Schedule 2. The Committee will have realised that, on the face of it, that paragraph gives the Commissioners power to make regulations, not merely for the administration of the tax, but also for is enforcement. The words "or enforcement" certainly appear in other Statutes, and I see no reason why the same does not apply in this case. It means that the House of Commons is giving to the Commissioners a completely unlimited right to provide for the enforcement of provisions which are largely unknown. As I see it, they are clearly given a right to make provision for criminal proceedings and for penalties.
To put the matter shortly, my right hon. and hon. Friends and I feel that this is giving away an essential power which the House of Commons should retain to itself, and giving it away carte blanche with no kind of control whatever. This is so fundamentally a matter in which the public look to the House of Commons to regulate what is done that, on the face of it, we must move to delete these words.
I wonder, Sir Eric, whether, for the sake of brevity, it would be in order for

me to refer to the next Amendment, No. 150, in line 45, at end insert:
but such Regulations affecting enforcement shall only operate if no resolution for their annulment has been passed within forty days of their being laid before each House of Parliament".

The Chairman: Yes, I think that it would be for the convenience of the Committee to discuss Amendment No. 150 at the same time.

Mr. Roots: Amendment No. 150 provides that if the Commissioners are to be given a power of this kind, at least the regulations in question should be subject to review by the House of Commons and, if need be, a Motion for their annulment should be put before the House.
For my part, I do not feel that this power should be given. Sub-paragraph (2) specifically mentions certain categories which can be dealt with in the regulations, and I see no reason why any penal provisions cannot be included either in the Bill or in a subsequent Bill. If the Committee feels that such strict control is not entirely necessary, the least we can do is to maintain the control which Amendment No. 150 would give.
I will not labour the point, because its importance will not be lost to hon. Members. I hope that the Government will realise the potential seriousness of what is before us in the Bill and be prepared to make provision accordingly.

Mr. MacDermot: I hope that I will be able to reassure the hon. and learned Member for Kensington, South (Mr. Roots). Once again, his reaction on reading the Schedule was similar to mine, because we, looking at the matter as lawyers, naturally think of the word "enforcement" as embracing and being directed primarily at that which lawyers think of from the point of view of enforcement, namely, proceedings that have been taken and penalties that are being imposed.
I have inquired into the matter and have been assured that it is accepted and that there are precedents for it; that in this context "enforcement" in this Customs legislation also has the meaning of enforcing that part of the administrative machinery which is designed to enforce the collection of the duty, and that nothing more is meant.
In support of this I invite the hon. and learned Gentleman to look at paragraph (19) of the Schedule, which specifically provides that the relevant paragraphs of Schedule I of the Betting Duties Act, 1963, shall have effect subject to the necessary amendments for the purposes of enforcement in the terms in which he was using the term, namely, offences, penalties, and so on. Those are all covered by paragraph (19). There would, therefore, be no question of the Customs seeking to use the regulation-making power in Clause 18(1) to try to alter, amend, or add to the powers which it is granted by paragrah (19).
I will explain the sort of thing for which the powers would be wanted. Earlier, I referred to the fact that we are proposing—and will discuss this with the bookmakers—that as a machinery for the collection of the duty for on-course betting, there should be daily sheets and that the bookmakers should acquire those sheets on payment of a sum, which would be advance payment of the duty from the race track authorities. That is a matter of administration, but it is also a matter of the enforcement of the duty because it is a procedure by which payment of the duty is enforced and collected.
The precedent for the use of "enforcement" in this sense is to be found in Section 18(1) of the Customs and Excise Act, 1952. I hope, therefore, that that is sufficient to reassure the hon. and learned Gentleman that we are not seeking to take any arbitrary powers.
On the second Amendment, paragraph (26) of the Schedule provides that
Any regulations of the Commissioners under this Schedule shall be made by statutory instrument which shall be subject to …
the negative Resolution procedure. Thus, there is no question of the Committee being invited to surrender Parliament's control in this sphere. It will retain it. The only affect of the second Amendment, if accepted, would be that the regulations could not take effect until the 40-day period had expired.
I ask the Committee not to impose this restriction for a practical reason, which is that we and, I believe, the whole trade in general, would like to see these new duties introduced at the end

of the flat-racing season. The date that is proposed for that introduction is the 24th October. This will leave a very small margin of time between the passing of the Bill and the introduction of the duty.
We do not propose to waste time on this matter. Immediately after the Committee stage is completed we propose to start discussions with all the interested parties—the bookmakers' associations, the racetrack authorities, and so forth—and to give them details of the procedure which we propose to embody in the regulations. There will be full discussions with them, and the regulations will, if necessary, be modified accordingly.
With that assurance, I hope that the Committee will agree to our being able to introduce these regulations in a way which would enable the duty to take effect on what would be this convenient date in October. As I say, full power will, of course, remain with the House to supervise the regulations by the annulment procedure under paragraph 26. I hope that with those assurances the hon. and learned Gentleman will feel able to withdraw the Amendments.

Sir L. Heald: I am sure that we are very grateful to the honourable and learned Gentleman for giving that assurance of his intentions, but there are a number of us who will still be concerned with his suggestion that the word "enforcement" is to be regarded as limited and controlled by paragraph 19 of Schedule 2. It certainly does not say so, and I feel that we require a little more assurance.
I ought to say just a word about this, because I was quoted in one of the daily newspapers as having expressed an opinion about what could be done under this provision, and it was perhaps put a little high. What I said was that under these regulations it would be possible for the Commissioners to make a regulation requiring every bookmaker to parade on Monday morning and submit himself to examination, possibly by removing part of his clothing, to see whether he had concealed any notes which he had obtained during his lawful avocations. I should like to make it quite clear that I did not suggest for a moment that the


Commissioners would have made such a regulation. All I suggested was that they might have made one, and I am still not quite sure that they could not have done so.
The honourable and learned Gentleman, as I understand him, has indicated that in the execution of this power of enforcement the Commissioners would consider themselves limited in the sense indicated by paragraph 19, but it certainly does not say so, and a number of us feel that there ought not to be a precedent created for an unlimited power to make regulations of this kind. It may be that this has been done before in relation to Customs. I know the difficulties which there are today, particularly at places like London Airport, and no doubt regulations have to be made, but that they should be applied in relation to this particular subject matter seems to be rather different.
I should like a little more explanation from the hon. and learned Gentleman, as to how it can be that, when we in Parliament approve this very wide power, it can be considered that there is restraint. Paragraph 19 of Schedule 2 indicates some of the ways in which this power could be implemented, but it certainly does not involve any restraint on the general power, and, although it is I rue that we in Parliament may he able to object, to have a regulation possibly made by the Commissioners is not really lair to them.
I do not suggest for one moment that they would want to make regulations of hat kind, but if they are empowered to do so, then carried with the power may also be said to be the duty. I feel that it should not be the Commissioners who should impose very severe penalties and control in that way. Therefore, before I decide about this matter I should like a little more explanation as to how it can be said that the inclusion of paragraph 19 imposes any such limitation.

11.45 p.m.

Mr. MacDermot: I do not think there is a great deal more that I can say in answer to the right hon. and learned Gentleman the Member for Chertsey (Sir L. Heald), without repeating myself. To put it in legal terms, I think paragraph 1.8(1) would be construed in the light of

paragraph 19 on the principle of expressio unius exclusio alterius.
If the right hon. and learned Gentleman will look at paragraphs 4, 5 and 6 of the Schedule to the 1963 Act he will see that it lays down specifically certain maximum penalties—for example, a penalty of £200, or double the amount of duty which is unpaid, or payment of which is sought to be avoided, as the case may be. If, in the unlikely event, the Commissioners should have an aberration and seek under paragraph 18(1) to lay down regulations which would seek to increase those penalties, for what it is worth, my view would be that those regulations would be ultra vires.
I can certainly repeat the assurance that I have given, that they would not attempt to do such a thing.

Mr. Roots: In the light of the assurances which the Financial Secretary has given, although I cannot say that I am entirely convinced, at least we shall have an opportunity to consider them.
The hon. and learned Gentleman said that he will consider a number of matters. So will we; and, in the light of that, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule agreed to.

Orders of the Day — Clause 15.—(CONTINUATION OF POWERS UNDER S. 9 OF FINANCE ACT 1961.)

Question proposed, That the Clause stand part of the Bill.

Mr. Terence L. Higgins: I do not think that it can be disputed that the Clause which we are now being asked to approve is one of very great importance. Its object is to renew the power which the Chancellor of the Exchequer has, to alter the main Customs and Excise duties by up to 10 per cent., by Order subject to the approval of this House within 21 days. He is allowed to do this provided we approve this Clause, if it appears to the Treasury that it is expedient to do so, with a view to regulating the balance between demand and resources in the United Kingdom.
The importance of the Clause is illustrated if we consider the relevant duties which are covered. These can


be divided into five blocks. Their estimated yield between 1966 and 1967 on alcohol is about £646 million, on tobacco £1,030 million, on oil—including petrol—£830 million, on Purchase Tax £670 million, and on other duties about £20 million, making a grand total of £3,200 million.
The Chancellor is being given power to vary these duties up or down by 10 per cent. This is clearly a very considerable power indeed. In fact, the Prime Minister, in speaking in a similar debate on a previous Finance Bill, said that it was one of the most important powers which had ever been given to a Chancellor of the Exchequer in peacetime.
In this context it is very important that before the Committee approves the Clause it should look at the question in the light of what the economic situation is likely to be, because we should grant this power only if we consider it justified in the light of what is likely to happen both to the level of demand and resources in the United Kingdom. The Committee, as the hour of midnight approaches and the passions aroused earlier in connection with Clauses on gaming and gambling dwindles, should consider the question as far as possible in an analytical manner.
I am delighted that the Chancellor is to reply to the debate. We should be glad if this gives him an opportunity to expand on the Budget judgment which he made and the explanation of it that he gave, to some extent, in the Second Reading debate of this Bill. This is particularly so because the National Institute of Economic and Social Research, in its quarterly review, said, in commenting on the Chancellor's Budget:
We welcome the demotion of the Budget itself from its pride of place. What is unfortunate is the simultaneous demotion of the Budget speech.
I hope, therefore, that in considering this Clause this evening we shall have an opportunity of examining the context in which these broad and important powers may be exercised.
The Chancellor is asking us to renew these powers to control demand in relation to resources, but what will he do to achieve a balance? The original Act states in terms the balance between

demand and resources, but it is possible to interpret this expression in a number of different ways—in particular what balance is to be sought between the level of unemployment on the one hand and the degree of price stability on the other? It is relevant to ask the Chancellor to spell out whether he intends to use these powers to achieve a high level of employment combined with price stability, or whether his intention is that which was spelt out in the Second Reading debate, when it appeared to us that he was coming much closer to the definition of "full employment" originally given by Lord Beveridge, to the effect that there should be more jobs than men to fill them.
We should ask whether this is not a definition of over-full employment, and whether the statement which the Chancellor made in his Budget speech did not imply that in relation to the objectives which had been pursued by successive Chancellors since the war the achievement of full employment, price stability and a rapid rate of economic growth, the emphasis had not been changing. The Chancellor appears to be placing far less emphasis than before on the need to control the rise in the cost of living and inflation. Indeed, in the words he used there was no explicit emphasis on this at all.
We should not agree to this Clause unless we are clear that it will be used to achieve the original set of objectives or the other set—which the Chancellor referred to in his Budget speech—with this considerable difference in emphasis. In the Second Reading debate the Chancellor said:
We are constantly trying to secure improving trade balance against a background of full employment. Full employment is the most difficult economic policy to follow, yet we are following it, adjusting our measures in order to maintain it ".
And he went on to say:
There is also the consequence that demands for increased wages are readily conceded in conditions of full employment."—[OFFICIAL REPORT, 25th May, 1966; Vol. 729, c. 644.]
It seems to me that he meant increased wages which are not justified by productivity. He is using the expression "full employment" when he means "over-full employment."
The first question is: will the Chancellor give us a clear statement of his intention in this matter? Has he deliberately placed less emphasis on the need to restrain inflation, and how does he regard the powers that he is asking for within this context? As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said earlier in the Session, there is a real need to redefine what we mean by full employment. Until this is done, we want to be assured that these powers will in no way be misused to achieve objectives which the Opposition would perhaps feel are not the right objectives for the country.
A question which immediately follows
from the point that I have just made is whether the Chancellor is intending to use the regulator as a means of implementing the incomes policy. Is the regulator a means whereby the incomes policy may be more readily enforced? Again, it is relevant to ask the Chancellor what his objectives are. Is he hoping to secure achievement of the norm of 3 to 3½ per cent. which the First Secretary has pronounced as the increase which should take place in average earnings? If so, the time has come when we should ask him whether the norm ought to be adjusted in a downward direction.
The norm was originally formulated on a basis of the figures set out in the National Plan, and it was suggested that a 3 to 3½ per cent. norm might be reasonable on the basis of a 3·8 per cent. per year increase in production over the five-year period. But in view of what has actually happened to output over the last eighteen months, and of the forecast which the National Institute is making of what is likely to happen in output over the next year, should we not ask the Chancellor whether he should revise his objective, and, if he is to use the regulator, use it to achieve a norm of 1½ to 2½ per cent. rather than the one which, according to present Government policy, has in mind? This is particularly important in the context of a seamen's strike, where we find ourselves in a situation where it is being suggested that a 3 to 3½ per cent. norm would not be inflationary.
The next matter that we ought to consider is that the need for the regulator is fundamentally dependent on what the Chancellor's expectations are. It is because there is an element of uncertainty in economic prediction that the Chancellor is asking for these extra powers. If there were no uncertainty he would not need to have the additional powers which he is asking the House to approve. This brings us to the question of his Budget judgment. Speaking in a similar debate last year, my hon. Friend the Member for Eastleigh (Mr. David Price) stressed the fact that the regulator might be needed because we had in controlling the economy very inadequate information on actual statistics.
It may be recalled that the former right hon. Member for Bromley, Mr. Harold Macmillan, expressed much the same view when he once said that we were constantly looking up figures in last year's Bradshaw. The time has come for us to ask whether the Chancellor should not make a far more explicit statement of what his expectations are about the economy in the forthcoming year or 18 months than he does at present. The First Secretary has no hesitation in doing this kind of thing for five years ahead. While we appreciate that it is very difficult for the Chancellor to make an explicit statement of, for example, what is likely to happen to wage rates, because corresponding claims will automatically take place, there is surely a case for spelling out in greater detail the Budget judgment which he outlined in his speech on Budget day.
This brings us to the vitally important question of timing. It is not merely a question of not using last year's Bradshaw, but of having next year's timetable. In this context it is very important that we should consider the implications of the regulator, because it is concerned with adjusting the timing during the year when fluctuations in activity take place in successive months. As I say, it is very important that we should try to pin down the Chancellor's expectations on timing.
12 m.
In this regard, we had a quite remarkable statement during the right hon. Gentleman's Budget speech. Having said


that there were a number of alternative ways in which he might raise revenue, the Chancellor said:
The Purchase Tax has been left untouched for some time. A rise in the
25 per cent. rate to 33+ per cent. would bring in about £110 million, and I can get nearly another £100 million from increasing the 10 per cent. rate to 15 per cent. Likewise, an increase of 6d. on the standard rate of Income Tax would bring in over £120 million in a full year. These are considerable sums…. My judgment is that any two of the three possibilities I have mentioned would be necessary."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1452.]
The right hon. Gentleman's judgment was that he would need to raise between £210 million and £230 million to fulfil his objectives as set out in the Budget speech, but the extraordinary thing is that he went on to say that he would introduce a Selective Employment Tax instead of either of the two measures which he might otherwise have selected. It is true that in a full year the Selective Employment Tax may yield much the same revenue as the two alternatives which the Chancellor has rejected, but the fact of the matter is that the timing of these measures would have been quite different. If the Chancellor selected either of the alternative combinations which he suggested in his Budget speech he deemed necessary, they would have begun to bring in revenue immediately, whereas the Selective Employment Tax will not begin to bring in revenue until the autumn.
Thus, the real equivalent to the measures which the Chancellor said he considered necessary, if we look at the question of timing as well as at the question of yield, would have been to put the regulator on to bring in the same amount of revenue between now and the autumn; then impose the Selective Employment Tax, and then presumably to use the regulator again in the spring of next year to compensate for the fact that a certain amount of the Selective Employment Tax was being reimbursed. This would have been the real equivalent of the measures he rejected, and in view of this I hope that the Chancellor will tell us how he sees the timing of the various changes in the variables in the economy over the next year or so.
The Chancellor could, alternatively, turn round and say quite simply that the

timing of the Selective Employment Tax is preferable to either of the two other alternatives which he suggested might be considered. If he does this, before we approve the Clause dealing with the regulator, we have to consider how the economy is likely to develop over the next few months, and in what way we are going to find the demand on the resources of the economy developing during that time. I should like to touch briefly on this because we can only consider the need for these regulatory powers if we consider also what changes are likely to take place in the forthcoming months.
The Chancellor, in his Budget speech, gave us a very good indication of the situation between January and March of this year. He said that consumer expenditure had gone up somewhat in anticipation of the Budget, particularly with regard to consumer durables, and so on. He laid rather less stress, indeed none at all, on the fact which the National Institute mentions, that there had been a significant increase in personal money incomes.
With regard to investment, the right hon. Gentleman said that industrial investment had been somewhat up, other investment down, and on balance it had probably gone up very slightly over that quarterly period, and that as far as the Government expenditure was concerned the July deferment had had some effect, but not yet the full effect.
The result was that we had a situation where the level of demand, on balance, was very high. Indeed, as I have suggested, there was over-full employment, but in the first quarter of this year there was probably going to be some slight rise. We also had a situation, I suggest, where there was some squeeze on profits, which did not favour investment, but employers were still hanging on to the labour they had and were not economising in it or to resist wage claims.
In the next quarter, between April and June of this year, it appears that the Chancellor anticipates a lull in consumer expenditure because of the aftereffects of the Budget anticipation. This is confirmed by other authorities. Investment will be pretty steady and


Government expenditure will fall somewhat because of the full effects of the July deferment measures.
This is a stable sort of situation and the Chancellor's taxation changes will have very little immediate impact—probably about £60 million, which might offset the likely fall in the surplus expected anyway in this period.
From July to September, the Chancellor expects private consumption to pick up again, private investment to be steady and current spending by the Government to be rising in real terms but at the reduced rate, which is reflected in the year's Estimates. On balance, everything seems to be going along steadily: again the change in taxation does not seem to be very great.
At the moment the Chancellor has not given us a clear indication of what he expects will happen to consumption investment, Government spending and all the usual Keynesian variables between October and December. But suddenly, in this period, for no apparent reason there are great changes in taxation proposed. I suggest to the Chancellor that this may mean that the regulator will have to be used arid that this is something which could be anticipated at this stage.
In the autumn the betting and gaming tax will take effect, yielding about £17 million in a full year. Against that, the surcharge will come off. The Chancellor has to date given us little indication of what he feels will be the effect of this, but a loss or revenue of about £70 million in this year seems likely. In addition to all this, there will suddenly be an enormous increase in taxation resulting from the Selective Employment Tax, despite the fact that the Chancellor does not appear to expect any marked change in the general level of demand.
What we need to clarify is, does the Chancellor agree that there will be a considerable deflation of demand because of the impact of the Selective Employment Tax which comes into operation on 5th September? There will be no disbursements from the amount which he will collect at that time, apparently, until February, when the payments for the four-monthly period up to December will be refunded. The next disbursements covering three months will not be due until the end of the next quarter in June.
My point is complicated, but, clearly, at this time of night those who are here must be enthusiasts. It is that we have a forecast, as far as we can ascertain the Chancellor's intentions, of a gradual and steady rise in the level of aggregate demand, but superimposed on this a sudden increase in taxation in the autumn and then a sudden relaxation of taxation when the Selective Employment Tax refunds take place in the spring.
We have had no explanation why this should be so. What we need to know from the Chancellor is whether he intends to impose the regulator to smooth out this otherwise sudden bump in the curve. We have almost reached a situation like that once portrayed in a diagram in the Economist, on which it was shown that the Government had stabilised the cost of living. The cost of living was plotted on a vertical axis, with a straight line across showing how the Government had stabilised the cost of living, but the horizontal axis was declining steadily. We are rather in this sort of situation. We have a slowly rising curve for demand and a sudden, big inexplicable bump in taxation in period September to February.
This question of timing was brought out clearly by the National Institute of Economic and Social Research, which said, in its recent quarterly review:
The proposed measure of deflation is necessary because somehow the rise in wage-rates must be slowed down. It is true that from this point of view the timing of the deflation—to take effect when the economy will probably already be losing steam—looks odd. No doubt, for administrative reasons, the selective employment tax could not be brought into operation earlier than September. In any case it could be argued that if this accident of timing were to give a sharper knock to the economy than was desired, the Chancellor could always use the regulator in reverse, incidentally taking a further step towards improving the tax structure.
It would, therefore, appear that, like myself, the National Institute of Economic and Social Research, in its quarterly review, suggests that the Chancellor may well have to use the regulator to smooth out the effects of his proposed changes in taxation. It is right and proper that before giving approval to the Clause we should ask ourselves whether the purpose of the regulator is to smooth out changes which can be anticipated at the time of the Budget, or whether, if this is to be so, some sort of measure should be built


into the Budget to smooth out the changes which are the result of the other Budget measures.
It is very important that we should establish whether the regulator is merely to smooth out unforeseen changes, or is also to be used to smooth out in the course of the year changes which could and should be foreseen.
I should like to make one final qualification, because the analysis which I have been spelling out may have been inaccurate, and I hope that if it is the Chancellor will clear up the point. He has said that he will impose the Selective Employment Tax, which will create the sudden increases and decreases in taxation which I have described and which may require the use of the regulator. He also said in his Budget speech that he will make credit available for those who must pay Selective Employment Tax in the intervening period before disbursement begins. He said:
I have not overlooked this, and, against the background of the general economic restraint which it is necessary to maintain, I shall be considering what steps may be needed to enable the banks to respond to temporary needs for credit in such cases."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1457.]
We need clarification of whether this proposal will do much to smooth out the bump in taxation of which I have spoken and whether this will mean that the regulator is not expected to be used either in the autumn or next spring. I understand that it will be possible for the Chancellor, not to provide finance for the industries that will not receive a refund, but to provide additional finance so that the industries that will pay the tax and then have it refunded will be able to borrow from the banks.
I am not clear how he might do this. I suppose that it might be done by not issuing so many Treasury bills or by changing the banks' liquidity ratio, or something of that kind. If the Chancellor does this, the deflationary measures which he is imposing in the Autumn will be very considerably modified, because, while he pulls in the money with one hand, he will immediately create the money which will enable people to pay the tax. He will be pumping back purchasing power into the economy.
Therefore, I hope that before we approve the Clause, which gives the Chancellor the very wide powers that I have described, we shall receive from him some elaboration on his Budget statement, and that we shall have some indication of how he sees the pattern of the economy in the next year or 18 months.

12.15 a.m.

Mr. John Biffen: My hon. Friend the Member for Worthing (Mr. Higgins) has suggested that all of us who have remained until this time of the morning could be described as enthusiasts. This I regard as a somewhat esoteric description, but there is one description which is probably even more esoteric and improbable. It is that we are members of that rapidly declining group, the Prime Minister's fan club.
There is a very good reason for arguing this case, because when the original Clause in the 1961 Finance Bill was discussed, the Clause the repeat of which is contained in this Clause, the Prime Minister, then speaking of the regulator, said this:
In terms of surrendering this House's control over the taxing power in the interests of economic planning, the way in which the Chancellor is doing it is going too far. I do not suggest that any John Hampden will rise in protest against what the Chancellor is doing, or that it is on a par with ship money, or anything of that kind. But it over-steps the margins of the relation between the Government and the House in the matter of taxing power."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1641.]
Those were very brave words. They are now lost in the mists of time, except for those who are uncharitable enough to disinter them from this Clause which now appears annually in Finance Bills. I think that the Prime Minister had a point. Although I would not include myself in his fan club, I think it at least justifies exactly the kind of searching examination which was conducted by my hon. Friend the Member for Worthing in asking that the Chancellor should give us some idea of his own assessment of the aggregate balance of supply and demand on which he may hope or expect to operate the provisions granted to him in the Clause.
We are undoubtedly at some disadvantage in trying to make our own assessments, because of the very inadequacy


of Government statistics. When a similar Clause was debated last year—it was then Clause 4 of last year's Finance Bill—the Chancellor of the Exchequer was reasonably eloquent on this point. He said that the absence of statistics caused him a great deal of concern. He added:
This is a problem to which I have started to pay attention, in conjunction with my colleagues in the Government … I shall certainly hope to make further progress on it."—[OFFICIAL REPORT, 19th May, 1965; Vol. 712, cc. 1487–8.]
The right hon. Gentleman may have been making further progress. He may in fact have achieved success, but we know that he has not communicated any news of success to his friends in the Department of Economic Affairs. As recently as 5th May we were told by the Minister of State, Department of Economic Affairs that
It is not customary for the Government to five short-term forecasts of the likely movment of the economy."—[OFFICIAL REPORT, 5th May 1966; Vol. 727, c. 1846.]
What my hon. Friend the Member for Worthing has asked this evening is the very minimum we can request of the Government, because they are being given enormous potential taxing powers in the Clause, specifically to operate upon the short-term movements of the economy. In these circumstances, answers of the nature of that given by the Minister of state, Department of Economic Affairs on 5th May simply will not wash. We very much hope that the Chancellor will be able to answer in the spirit with which he dealt with the problem of statistics when a similar debate was conducted last year.
I would like to dwell for a moment on what seems to be the main characteristic of the powers the Government are seeking under Clause 15. The major characteristic is that the Chancellor seeks further powers of potential taxation which can operate directly upon consumption. They are, as we all know, the regulator taxes to increase Excise and Purchase Tax duties which have a considerable potential, because—and I believe the Chancellor will confirm this—they can operate to the magnitude of £320 million if applied in full.
The reason why the regulator incorporated these kinds of taxes was because it can operate directly and quickly and,

on the whole, pervasively upon consumption. We are entitled to look at the present level of consumption and to invite the Chancellor to join with us in this exercise and to ask him to give us the benefit of his judgment about the present and likely trends of consumption over the period for which he seeks powers under Clause 15.
At the moment the evidence is that consumption is holding up remarkably well. From the Government figures published for April, 1966, I noticed that the retail sales volume is up by 3 per cent. and by value 5 per cent. The figure of 3 per cent. is probably the more important, and on the available evidence provided by the Government suggests that retail consumption is rising more rapidly than the general level of economic activity as a whole. That this should be so is-hardly surprising because, as my hon. Friend the Member for Worthing has pointed out, we are seeing a very considerable increase in wage rates.
The Ministry of Labour's last published figures of a detailed analysis of earnings is for October 1965—not much sign here of the improved statistical surveys we were promised by the Chancellor last year. If we take advantage of the figures, we see that earnings were up by 9 per cent. for wages. We cannot quote any comparable figure for salaries because the Ministry does not offer this facility.
We know that many outside organisations conduct their own surveys, and my hon. Friend the Member for Tavistock (Mr. Michael Heseltine) is associated with a company which probably has as fine a knowledge as any commercial institute of the movement in salaries. I was discussing this with him earlier and he assures me that in his judgment the movement in salaries is certainly no less as dynamic as the movement in wages. It is hardly surprising that this is reflected in the high level of consumption
On the other hand, it seems that one of the other major components in demand upon the economy is investment. Here the picture is not quite the same. There are already signs that the levels of investment are under very considerable pressure. Again this should hardly surprise those of us who have followed the recherché activity of watching the


successes and failures of the First Secretary. Undoubtedly his success with prices has not matched his success with industrial costs. The Treasury figures published of gross trading profits, adjusted seasonally, show that they are falling.
The latest evidence, which is available only this evening, from the Confederation of British Industry shows that the signs are that investment over the coming 12 months could well take a downward turn. I quote from the 26th Industrial Trend Survey released at 10 o'clock this evening. Under the heading "Capacity and Investment", it tells us that the previous position
is reversed; an upward balance of 5 per cent. has changed to a downward balance of 4 per cent.
That is a reference to plant and machinery.
At the same time, the downward balance of expenditure on buildings has further increased. The analysis"—
this is the vital sentence—
of earlier cycles suggests that these figures imply an absolute decline in investment in manufacturing industry over the next 12/18 months".
It is this set of circumstances which so much underlines the point made by my hon. Friend the Member for Worthing about the Selective Employment Tax when it operates later this year. The calculations, as best as I can make them—and they can but be confirmed or corrected from the Treasury Bench—are that the Selective Employment Tax will provide a pressure of between £200 million and £225 million upon the liquidity of manufacturing industry in the initial period of its collection before any repayments are made.
It is perfectly legitimate to argue that, ultimately, there will be repayments, but there will come a period of four months or so when industry will be under severe liquidity restraint which could easily exacerbate an already incipient downturn in manufacturing investment; and the factors which will affect this will include the interpretation which is placed on the Chancellor's words to the effect that the banks should be able to make credit available to cope with the demands of financing the Selective Employment Tax. There is, in a sense, an added regulator

implicit in those words. But we have had very little explanation of how the Chancellor hopes the banks will interpret his words, and we are entitled to such an explanation now in the context of Clause 15, which embodies the other regulating power explicitly sought by the Government.
There is no doubt that the nightmare of any Chancellor is to get the worst of "stop" and the worst of "go", still to have inflation yet to have declining investment. It seems to me that this could well be the right hon. Gentleman's unhappy fate.
As I see it, it is a commentary on a tired and uncertain management of the economy that, after 18 months or so of high Bank Rate, of credit restraint, of Income Tax increases, of Excise Duty increases, we still find ourselves, when discussing Clause 15, quite seriously and solemnly contemplating the upward use of the regulator. We must all in honesty agree that we cannot renew this regulating power without envisaging the possibility of its being used upwards. On the analysis at which I have hinted—I can do no more than hint, with the figures available to me—I would expect the regulator probably to be used upwards rather than downwards.
If we are confronted with that awful dilemma, although I am in the verbal sense seeking to put the Chancellor in the dock as he is to answer this debate, my own judgment would be that the person really guilty of this woeful mismanagement is the First Secretary of State rather than anyone else.

12.30 a.m.

Mr. R. B. Cant: I feel in no particularly masochistic mood at half-past midnight, but I want to make one point. We had a delightful display of Keynesian
macro economics from the hon. Member for Worthing (Mr. Higgins). This was altogether desirable, but I cannot understand why everybody is so opposed to the regulator. One would almost think that this potential tax had horns of one kind or another.

Mr. Biffen: I listened with great attention to my hon. Friend the Member for Worthing (Mr. Higgins). Neither do I think that I was so incoherent. We both made the point that we accepted the


Regulator. The only damaging quotation which I made was from the words of the Prime Minister when the regulator was originally introduced.

Mr. Cant: The impression which I got was that there was a fear about it. I would have thought that our experience indicated that fiscal policy must bear basically upon consumption. We have had evidence that this is likely to be the most difficult aspect of the problem. What the Chancellor should do is not leave the Regulator on one side and not bring it into operation unless to do so is absolutely necessary, but think much more in terms of the regulator in terms of fiscal flexibility.

Mr. Michael Alison: When compared with Clause 42, by which the Selective Employment Tax is introduced, and with the acres and pages and lines of print which have appeared a bout the Selective Employment Tax, the Clause dealing with the regulator strikes one as a very modest and moderate and brief set of words, but we should remind ourselves that the significance of this Clause is akin to that of the rudder of a ship and that although it may be submerged in the rest of the Bill it is of enormous significance and importance.
I draw attention to the fact that at 10 per cent. the regulator is capable of regulating the volume of returns from Customs and Excise, about £3,440 million a year, and represents a power of regulation of resources and demand of about £340 million per annum, substantially more than the total amount of the Selective Employment Tax can raise even in the exceptional circumstances of this year. The Chancellor estimates that this year he will get £315 million from it and in a normal year £240 million. So we are putting into the hands of the Chancellor an instrument of taxation of a great deal more than the full Selective Employment Tax and it is not a small item which we are considering.
Looking at the course of events even since the Budget judgment, it seems that we are likely to have to make use of the regulator. The basis upon which I suggest that is the very disturbing signs which have come into the economy since the Budget judgment. It must have been depressing for the Chancellor—it certainly

was depressing for the whole country-to see the latest figures for the visible trade returns for last month's, even the three months' comparison, which gives a slightly more balanced view. The visible trade gap widened from £16 million in December 1965 to February 1966 to £24 million in the March-to-May quarter of this year, a substantial increase. If this is the trend of the gap, even in the circumstances before the surcharge is removed, that is to say, while overseas exporters and our importers are holding back in anticipation, the implications are very serious.
I want to consider whether, in the light of the surcharge coming off and the trade gap widening uncomfortably, the Chancellor has his judgment right in terms of the amount that he expects to take out of the economy, especially in respect of the Selective Employment Tax. I wish to refer to a figure which the Chancellor gave at the end of his Budget. He said that he expected the yield on the Selective Employment Tax to be £315 million in the first year of operation in which part would be refunded late, and that it would be £240 million in a normal year. The Chancellor may have registered the point already that Professor Paish pointed out in a paper which was circulated not long ago that the outstanding refunds which will not come back straight away will remain part of the assets of employers which they are entitled to finance by borrowing; so the Chancellor is not taking out nearly as much as he suspects, particularly if he makes concessions in respect of credit restraint later on.
The net withdrawal in respect of the Selective Employment Tax at the rate of £240 million a year for a period of seven months, assuming that the balance which will come back can be considered as assets which employers are entitled to finance by borrowing, will be as little as £140 million, as distinct from the £315 million which he suggests. If businesses consider the refunds which they will ultimately get as assets which they can finance by borrowing, the addition to the right hon. Gentleman's Budget surplus is less than £315 million.
May I look for a moment at the way in which the millions which will fall upon the service industries will filter through to consumption, because that is obviously


of great interest. The estimate which has been made is that the service industries will have to foot a bill of some £240 million altogether. The three trades which one might call the consumer trades—the distributive trades, catering and services of various kinds—will almost certainly pass on the extra impost put upon them by the Selective Employment Tax. That will take money out of consumption, and it will raise the cost of living and prices generally. But it should be borne in mind that certain services will not have an effect on consumption, but on investment and saving.
As my hon. Friend the Member for Oswestry (Mr. Biffen) pointed out, it will be an attack on investment and saving to some extent. It will affect banking, professional services and insurance, which will put up the cost of saving, and it will certainly reduce the incentive to invest. Part of the effect of the Selective Employment Tax will undoubtedly be an attack on investment and saving, whereas the total amount which will be taken out of consumption will be much less than the Chancellor suspects.
The Selective Employment Tax will raise less than the Chancellor thinks. It may well have the effect partially of not reducing consumption so much as reducing investment and saving. It will certainly not tackle the redistribution of labour, as Ministers have been trying to suggest to us. If it is really going to have the effect of redeploying labour, the buoyancy available to the revenue will be less than the figures which I have suggested. It will not do anything at all towards encouraging the more economic use of manpower.
I fear that we shall have to use the regulator, and it is worth reflecting that, despite all their ballyhoo and propaganda, in this year of economic crisis to the nation, the Government will have to fall back on the highly intelligent instrument that was introduced by my right hon. Friend the Member for Wirral (Mr. Selwyn Lloyd). It has a far greater potential for withdrawing money from the economy than the Selective Employment Tax, which is easier to discuss in legislative terms than to operate.

Mr. David Howell: Like my hon. Friend the Member for

Oswestry (Mr. Biffen), I am hesitant about being identified as being enthusiastic. The real reason why I am here is that I am a pessimist about the Chancellor's capacity to understand the critical nature of the present economic situation and about his capacity and that of other politicians to understand the real policy and the real approach which is necessary for the economy if we are to jack ourselves up into the high-growth league where alone we will find stability and escape from the recurrent economic crises with which we have been faced in recent years.
The Clause raises two questions which are related to that point and which I would like to put forward. The first, which has to some extent been covered in the discussion, is whether the Chancellor will be forced to use the powers in the Clause in the coming months. The second is whether he ought to use those powers in the coming months. As to whether he will be forced to do so, I have little doubt. I think that he will. He has left himself little choice in the matter.
As has been suggested, the Chancellor or somebody else will have to compensate for the erratic impact of the Selective Employment Tax upon the economy, and there is no doubt that if we are to move towards a more sensitive control of the level of demand, some compensation for this very erratic impact will be needed. That is one reason why the Chancellor has very little choice in using it.
Another reason is that the Chancellor's arm will, I have no doubt, be twisted, if it is not already being twisted, by foreign creditors on the undeniable ground that the prices and incomes policy is not "delivering the goods" and is not working and that something must be done. For these two reasons, I think that we will see the Chancellor forced into the position that he has little choice but to use the economic regulator and the powers contained in the Clause.
The second question is one to which the Committee should give much closer attention, because it goes much closer to the heart of the problem of whether the Chancellor's method and approach in the


management of the economy and his use of the powers of the Clause are right and whether he should use the regulator to reduce the level of demand in the coming months.
The National Institute of Economic and Social Research has called the Chancellor's policy a counsel of despair. My belief is that if in the coming months we see more cuts in the level of demand, that charge will be still more deserved. 'The figures which we have heard from he survey of industrial trend by the Confederation of British Industry on the possibilities of a downward turn in investment, in new plant and equipment, which is the key to our economic efficiency and future exports, reinforce that trend and reinforce the view, which is gaining widespread assumption and belief outside the House of Commons, that he golden day when expansion can be resumed, about which we hear so much, is receding further and further into the distance until it seems that it will never come.
In asking about the powers of the Clause, what I am really saying is something which has been said many times before by hon. Members on both sides, particularly by hon. Members opposite in the days when they were campaigning before the return to power of a Labour Government in 1964, that these methods, this power and other methods for cutting back internal demand are only a substitute, and a very poor and self-defeating one, for a concerted economic programme to raise efficiency, inspire confidence and put us back into the high productivity situation in which alone we will achieve price stability and less vulnerability to international crises.
I accept, with my hon. Friends, that we cannot run the modern economy in an overheated stage; that is common sense. The answer, I believe—and I may not have agreement in this from either my own side or the other side of the Committee—is not to go back to the primitive reaction of slashing demand either by this power or by other powers. That never has been, and never will be, the answer. The answer, if we are seeking a higher labour reserve, is to look at the economy and see that far from there being a shortage of manpower, there is a vast surplus of manpower. If we can devise a means of overcoming the problem of over-

manning and really shape our manpower resources, we can get away from the old arguments about the shortage of labour. We must try to attack the level of demand to convince people that something really constructive is being done, possibly to control inflation and certainly to please our creditors overseas by demontrating that something is being done.
12.45 a.m.
If we recognise that the problem is over-manning and not just a shortage of manpower, it should be possible to combine a rapid increase in output and growth. This is the secret of price stability, leading to a fall in unemployment, and thus by-passing the whole overheating problem and producing all the labour that is needed.
However, the proviso and crux of the matter is this. To launch this expansionist policy—to get out of the dreary situation in which we see miserable rates of growth and productivity—we need an economic and social policy which is concerted. It is hopeless to attempt to follow an expansionist policy if the Government of the day are not prepared to attack the manpower problem by going to the heart of it, which is restrictive practices. It is equally hopeless to try to follow an expansionist policy if the Government are not prepared to make the tax changes necessary to provide the right incentives to put us into the high productivity league.
As to the Clause and the regulator, as long as the Government refuse to tackle the problems I have described on a concerted basis so long are we condemned as a country to these primitive weapons of cutting back internal demand—not only primitive weapons but self-defeating ones. I say that because in the long run any Government who use only such primitive weapons will merely be leading us from one crisis into another, will discourage investment in the plant and equipment—not forgetting brain power and imagination—which will produce the exports which sell tomorrow and which alone will solve our export problem. Only the sort of expansionist policy I have described will prevent us from being held back and will postpone the day when we can achieve the very high productivity and stability which goes with it and is inseparable from it.

Mr. Iain Macleod: I thought that the Chancellor intended to speak at this point. However, if he would rather I spoke first I will do so, and no doubt he will address the Committee then. I hope that after the right hon. Gentleman has spoken we can give him the Clause and go to bed. I will not speak for more than a few minutes, and I assure the hon. Member for Stoke-on-Trent, Central (Mr. Cant) that we want the right hon. Gentleman to have these powers, that we realise that it may be necessary for him to have them, and that there is no question of my hon. Friends opposing them or voting against the Clause.
I congratulate my hon. Friend the Member for Worthing (Mr. Higgins) on the way in which he initiated this discussion and requested the Chancellor to bring us up to date on his Budget judgment and present thinking. I am sure the right hon. Gentleman will agree that we have had some excellent speeches in this short debate on the Clause. Speaking as an old Parliamentary hand, I admire the skill with which hon. Members have kept in order, which is a difficult thing to do when discussing this subject of the powers under the Clause and the regulator.
What interests me about the economy today—and I was recently looking at graphs going back over the last 10 years—is that although one can parallel any single incident, stagnant production, or whatever it might be, one cannot find a time when everything was happening at once, as it is now. This is why the present situation concerns us very much indeed, and why we have to look at this Clause, and the possible use of a regulator that can bring in £320 million, in the light of the fact—as I think my honourable Friend the Member for Oswestry (Mr. Biffen) said in a splendid speech—that we have at the moment the worst of both worlds. We have all the bad effects of "Stop", without the occasional advantages that that can bring to our economy.
My hon. Friend quoted—he was splendidly up to date—a Press release issued at 10 o'clock last night, three hours ago, from the and the sentence he quoted—
The analysis of earlier cycles suggests that these figures imply an absolute decline in

investment in manufacturing industry over the next 12–18 months".
—is the one which worries us. In this C.B.I. release there are a number of good features, particularly on the export procedures, but I think that my honourable Friend the Member for Oswestry put his finger on our present dilemma when he said, in effect, that the trouble was the First Secretary of State.
I do not wish to attack the First Secretary of State in his absence tonight, but almost since October, 1964, the Chancellor of the Exchequer has been trying to bale water out of the boat but has not been able to do it as fast as the First Secretary has succeeded in pouring it in. As a result the ship has never been anything other than waterlogged, and it is because of this that the questions raised by my hon. Friend the Member for Barkston Ash (Mr. Alison) and my hon. Friend the Member for Guildford (Mr. Howell) are so important now.
I will just summarise the anxiety
which I have, which was put very well by my hon. Friend the Member for Barkston Ash, in considering the Budget judgment. When I spoke in the Budget debate I used the hawk and dove anology and said that what worried me about whether enough was being done was that if one took the hawk view of the economy the Chancellor was waiting dangerously long, and if one took the dove view it was strange to hit an economy, which was presumably then on the down-turn, as fiercely as at first sight the S.E.T. proposals seemed to do. I say "at first sight" because I agree very much with what has been said following Professor Paish, and, indeed, the National Institute's Economic Review, and I doubt very much whether the measures are going to be as deflationary as at first sight would appear.
We would very much like the Chancellor of the Exchequer, when he replies in a minute from now, to tell us, particularly on the question of bank advances, how his thought has advanced in the weeks since he made his Budget speech. Lastly, there was a really splendid little cameo of a speech from my hon. Friend the Member for Guildford. I am sure he is right when he concentrates on the erratic impact of the S.E.T., which leads him to the gloomy conclusion, which I fear I share, that we


will probably use the regulator and, I would think, use it in an upward direction. All this comes back to the problem that he emphasised, that there is not really a basic shortage of manpower in this country. There is a vast surplus of manpower, because our productivity is hopelessly uncompetitive.
I will not strain your patience further, Sir Eric. I have been conscious in the last few minutes that I have been straying a little out of order, but it is difficult on the Committee stage of a Finance Bill to find opportunities for what might be called a general economic discussion. Therefore, I make no apology for taking this opportunity on Clause 15 of inviting the Chancellor—and, if I may say so, it is very good of him to stay to reply to this debate at this time of night—to bring us up to date with his thinking, and sifter that I am sure that we would agree to give him the Clause.

Mr. Callaghan: I did not realise that the right hon. Member for Enfield, West (Mr. Iain Macleod) wanted me to speak before he did, but I do not suppose it makes any difference.
I thought this would be a useful debate, with your tolerance, Sir Eric, and I think it has been. I am always appreciative of the advice that I get from hon. Members on both sides of the House. I never lack advice. Indeed, one cannot have too much of it in this field. I find that one of the most useful things to me is to know what people are thinking and saying.
I come immediately to the hon. Member for Oswestry (Mr. Biffen), who reflected very adversely on the quality, nature and volume of our statistics. I agreed with him a year ago, and I still do now. But this job is a long haul. It involves many Government Departments. It involves recruiting people who are scarce. We are making improvements in statistical appraisals, though not as fast as I would like. This is not the time of night to make party points, but I now know what Mr. Harold Macmillan meant when he said that he felt that he was always looking up last year's Bradshaw to find out where he was now.
Until we can get much better statistical appraisals than we have got at the moment, I have to act as a mixture of Old Moore and Captain Coe. For that

reason, I am not going to give many forecasts tonight about the future, because when you are a mixture of Old Moore and Captain Coe, if I may carry the metaphor a bit further, you have to fly by the seat of your pants.
I would only say to the hon. Member for Worthing (Mr. Higgins), who clearly is an enthusiast in this field, that I would be the last person to try to temper his enthusiasm in any way. But I would make this suggestion to him. As everybody knows, I am neither an economist nor a statistician; I do not have a trained mind. I merely dance to an old Hungarian tune. But I have been in politics for 21 years, and have survived. The lesson that I would offer to the hon. Member, if I may in all humility, is always to pay a proper respect to arithmetic and a proper disrespect to forecasts. So far I have managed to survive—just—by doing that. But, on the kind of forecast that we get now, I would not dream of building the mountain of speculation that the hon. Member for Worthing built. This is why I have been unrepentantly an advocate of the principle that one must keep taking the temperature, one must constantly be ready to use all the battery of economic instruments that lie at one's disposal, because I do not have the secret—and I do not think any previous Chancellor has either—of being able to say on 6th April what the economic climate will be in six months' time, let alone in 12 months' time.
So I shall go on in this way, and I believe that there is a growing acceptance of this need, though I would much prefer to go the way of the hon. Member for Oswestry and be able to feed all the various alternatives into a computer and know what the answers were, so that I could take rather longer-range decisions than it is possible to take at the present time.
For this reason, as everybody has acknowledged, the regulator powers are very valuable. I am sure the Committee would be right to renew them tonight. I think hon. Gentlemen have rather overestimated the yield of using the regulator. I would put it at rather more than £100 million less than they do. I would have thought it was something under £200 million. I have not got the figure, but I think they are putting it a little high.
It has got this value, that as a result of a combination of the right hon. Member for Barnet (Mr. Maudling) and the then Opposition, we have got much more flexibility into the regulator than existed in 1961. It is an astonishing thing that this has hung over us since 1961 but has been used only once—by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd). I take the point. I am not sure whether I quite understood the hon. Member for Barkston Ash (Mr. Alison). It seemed to me that he indicated that I might have used it in a downward direction.

1.0 a.m.

Mr. Alison: Mr. Alison indicated dissent.

Mr. Callaghan: He did not. Well, I would not be dogmatic. I would not care to forecast which way it would need to be used in the autumn. I cannot look as far ahead as that. For that reason I cannot give an answer to the right hon. Member for Enfield, West, as to how bank advances will go in the autumn. It is not in our power at the moment to look as far ahead as that. That is why I decline to go into a number of interesting questions that I have been asked, and about which I speculate from day to day. I simply cannot give reliable information about them this evening.

Mr. Biffen: I hope that I am not anticipating a point that the Chancellor is about to make—but are we to understand that at this point of time the Chancellor is not prepared to reveal how he hopes banks will interpret any demand made upon them for credit to finance payments under the Selective Employment Tax, but that such directives will be issued in the autumn and the credit then required may be the subject of a regulatory influence which will be decided upon not until the autumn?

Mr. Callaghan: Broadly speaking, I do not dissent from that. At present there is a limit on advances of 5 per cent. over 1965. I would certainly want to see how advances moved, and what the pressure on the ceiling was. The banks are right up against the ceiling at the moment. We shall have to watch this situation from month to month as the returns come in and take our decision both in the light of the credit situation at the time and

the need of industry for liquidity. This is not a decision which can be taken in June.
I am not being discourteous to the right hon. Gentleman or to any other hon. Member who has spoken, because I regard their contributions as valuable; but I have nothing more to say than I said in the Second Reading debate and in my Budget speech. Although these circumstances change rapidly they do not change as rapidly as that, and one month's trade figures, while interesting, are not always significant. The longer look we can take at these matters the better. I am trying to get nearer and nearer to the hon. Member for Oswestry, but I have nothing new to say. My objectives are as set out in the Budget.

Mr. Higgins: I am grateful to the Chancellor, but I want to take up one point which he made. He says that he is not sure what will happen in the autumn, but he must have formed some judgment of what will happen, otherwise he is simply taking this purchasing power out of the economy with no clear view of what his intentions are. Could not we have some view whether he feels that that general level is going up? Can he explain the extraordinary hiccough which appears to exist in the incidence of taxation?

Mr. Callaghan: Yes, but neither my predecessors nor I have thought that our forecasts were of sufficient reliability to do any more than indicate their general nature through the measures we proposed. I took the view that we were going to have a dip in consumer demand in the second quarter—we shall have to wait and see whether this turns out to be the case—as a result of pre-Budget buying. We could ride the summer and—assuming that we could get the Selective Employment Tax in operation—there should be some new measure in the third or fourth quarter. That is the basis on which I was operating.
I took the view that we could ride the summer months, if necessary, because I did not want to give the too-violent downward push to the economy that the right hon. Gentleman was speaking about. He will remember that in February and March there was a great deal of uncertainty whether the economy was on the turn. I must not get on to the Selective


Employment Tax. I see that you are
shaking; your head at me, Sir Eric, and so I quickly look away. But the reason why this was resurrected out of the pigeonholes was precisely to achieve this.
If I am asked what effect I expect there lo be, I expect the tax to have a disinflationary effect in the autumn, for a number of reasons. I shall then be able to use the regulator, if I am conceded these powers, either way. This is why I thought there was a certain amount of prescience in what I first thought the hon. Member for Barkston Ash said, namely, that it might go downwards. It would be possible to use the regulator either way.
We ought to have all these possibilities in mind in relation to the situation that may develop in the third and fourth quarters of this year, but I expect the Selective Employment Tax to have a disinflationary effect. I ask for the use of the regulator now so that I may be able to use it either way, but the hon. Member for Worthing would not expect me to indicate to him if or when I intend to use it. I agree with my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant). He made the point perfectly that I should be right to use it, his speech was much more succinct than mine.
What I want to see, in a way that will help the economy very much indeed, is a much slower growth in incomes during the course of the current year. This is the secret. But it is no secret really. My predecessor the right hon. Member for Barnet used to make this plea regularly. Indeed, it was he who coined the phrase originally about his own policy in 1964—he is always a very honest person—of getting both inflation and stagnation at the same time when the production index had been stationary for several months. He has used the joke about me since, but it was his joke about the consequences of his own policy. But we must, I agree entirely, get incomes under control to a much greater extent than we have done over the last 18 months.
My views and the views of the Government are well known, and I will not spend time developing them again tonight. I regard this as an essential

condition. When I listened to the earlier parts of the speech of the hon. Member for Guildford (Mr. David Howell) I had hopes that he was going to tell me how I was to achieve all these magic things. I promise him that there is a crock of gold waiting for him if he will only turn his generalisations into specific proposals for action. It is the easiest thing in the world—I do it so much myself—to preach about what ought to be done, but it is jolly difficult to translate into reality general remarks about getting management to shake out surplus labour. However, we go on seeking the means to do this. I agree with him that there is a surplus of labour available today if it were properly used. Indeed, rather cynically it might be said that one of our major assets is the poor quality of a great deal of British management, because the capacity for improvement is so vast that once we really get going there will be nothing to stop us. I think that the quality of management is improving in several ways. There is a changing atmosphere. But we need many more considerable changes in management than we have at the present time. Frankly, this is where the lead must come from in shaking out surplus manpower.
Restrictive practices by trade unions too are completely out-dated provided that we intend to maintain a full employment economy. I thought I noticed a certain divergence of opinion on this between two of the speeches from below the Gangway. Restrictive practices are out-dated. I hope that the Royal Commission on the Trade Unions will have something to say about this when it reports. Meantime there is a great deal of slow, steady but good work going on in this field, particularly between management and unions, but it needs to be greatly accelerated.
I would say to the hon. Member for Guildford that much of what he is asking for is being carried out by the Government now. It is very slow work, and it takes time to show results. The Department of Economic Affairs, which I regret is so constantly attacked, having been separated from the Treasury, is, in my view, doing a job which the Treasury would not have done. It did not do it in the past. Because of the great volume of work that falls on the


Treasury, it is difficult for that Department to handle the kind of problems and relationships with industry that are being handled by the Department of Economic Affairs. I hope that the hon. Gentleman will not underrate the great work that is going on quietly, work that is not seen, through the Department of Economic Affairs, through the "Little Neddies", and through the various councils which have been set up. I see a lot of it, and I believe that it is in this, rather than in the more spectacular things that are being done, that the secret for the future lies.
I am grateful to the Committee for saying that it is willing to concede the power of the regulator. I would have been surprised if it had not. I have been very interested in the debate. I assure the Committee that I thought it was well worthwhile waiting to listen to. I approach these matters with, I hope, a due sense of humility. One does not have to be long in this job before one learns how fallible man is in trying to forecast the future, and in trying to foresee what can be done.
The other lesson which I have learned
is that one can propose all one likes, but Governments do not settle things in the end. Whatever economic policy the Government try to follow, it is the people who decide in the end according to their own sense of priorities in relation to price stability—which I place very high on my list of priorities—increases in incomes, high productivity, or whatever it may be. This is a fact of life. It is the nature of life in this country.
I think that everybody wants to change a great deal. We may differ on how we want to change it, but I think we all want to change it, and I think that the change is coming about. Speaking for myself, if I may, at ten minutes past One, I am not pessimistic about the long-term future, whatever short-term difficulties we have. I do not think that anybody who was not of a sanguine temperament could stay in my job for very long.

Question put and agreed to.

Clause ordered to stand part of the Bill.

The Chancellor of the Exchequer (Mr. James Callaghan): It is my privilege to move,
That the Chairman do report Progress and ask leave to sit again.
We have made some progress again today. In fact, I think that we have made quite a lot of progress and that this would be an appropriate time to draw our deliberations to an end.

Question put and agreed to.

Committee report Progress; to sit again this day.

BUILDING MATERIALS (PRICES)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

1.9 a.m.

Mr. William Hamilton: This debate arises out of a letter from Fife County Council, which I received a week or two ago, enclosing examples of rising prices of building materials. The list was provided by
the works manager of the county council's works department. His letter is dated 3rd May, 1966, and he gives examples of about 30 building materials the prices of which have increased since March, 1965.
I propose to give a few examples to show the problems which Fife County Council and other local building authorities are facing. Yorkshire fittings—my hon. Friend knows what I am talking about—increased in price by 7½ per cent. in November, 1965, by a further 5 per cent. in January, 1966, and a further 6⅔ per cent. in February, 1966. Securex fittings, which are a similar refinement of the Yorkshire fitting, increased in price by 5 per cent. in November, 1965, and 7½ per cent. in February, 1966. Brass screws increased by 5 per cent. in November, 1965, another 5 per cent. in January, 1966, and another 5 per cent. in February, 1966.
The council then gives a whole series of further increases. Ironmongery increased in price by 10 per cent. in January, 1966, copper tubing and copper sheet which went up tremendously in price for reasons which are well known to the House, glass increased and water storage heaters went up by 15 per cent. in December, 1965. Significantly enough,


the Scottish National Coal Board brickworks had a very good record in this respect. In the Fife area the average price increase over the last four years has been about 2½ per cent. to 3 per cent.
The most startling price increases are in connection with electric wiring cables. Figures given by the Fife Council show an increase of 2: per cent. in June, 1965, a further 10 per cent. in November, 1965, a further 9 per cent. in January, 1966, 4 per cent. in February, 1966, 3 per cent. in March, 1966, 6 per cent. in April and 12½ per cent. in May. In every month of the year prices have gone up, making a tota' increase of 47 per cent., which, compounded, is well over 50 per cent. for the period referred to by the works manager.
The result of these continuous increases is that no supplier is willing to submit a fixed price. All contracts have an escape clause. The Fife Council quote the example of the Queen Anne School in Dunfermline, when a quotation was given by the supplier of the main switch gear in June 1965, and on that basis the electrical schedule was priced and submitted. But when the order was recently placed the price had risen by 200, an increase of 20 per cent. But the material is not required for several months, and it is therefore possible that there will be a further increase before that time.
At the same time, on the same contract, the cost of the main cables had increased by £616 10s. 8d. The works manager concludes his comments with these words:
It does seem to me ridiculous that one of the largest industries in the country should he quoting for contracts extending over a period of two years in this precarious way, and no doubt this is the reason why there are more bankruptcies in the building industry than in any other industry in the country.
He included a cutting from the Building Contract Journal dated 24th February, 1966, which says:
Firm-price tendering for public works in Scotland is facing a crisis. Responsible officials have warned building firms that the position is critical, and that changes are essential.
Rising costs have created a situation which makes nonsense of the original prices in many instances. Advice offered by local authority officials, consultants and others in charge of

contracts to 'use alternative materials' is regarded as unhelpful. Sometimes there are no alternatives, or none which can be used without involving substantial additional costs."
I should like to ask my hon. Friend whether that is the case, whether alternative materials are available, especially in Scotland, and in quantity and whether their use would involve the local authorities in substantial additional costs.
Following the receipt of this communication from the Fife County Council, I wrote to the Minister and received a reply from him dated 31st May, in which he expressed regret about the price increases but explained that they were not abnormal, if allowance was made for the increases in copper prices which are outside his control. He pointed out that a close watch is kept, that several building materials are included in the early warning system, and that a reference to the Prices and Incomes Board would he considered, if appropriate.
My immediate reaction to the letter was that it was extremely complacent, and I wrote to the Minister and told him so. At the same time I asked him for figures of the profits and dividends of some of the leading companies, which he was good enough to send me. I took those figures to the House of Commons Library to have them cross—checked by our Library staff. Had I not done so I would have been quoting wildly inaccurate figures in this debate-figures which were supplied by the Ministry.
I wish to give some examples. The profit figures given by the Ministry for Associated Portland Cement for the year ending December, 1964, were £112·7 million. The Library figure, which is the correct, provisional figure, was £24·8 million. The figures for the following companies are of trading profits before charging depreciation, directors' emoluments and taxation. In the case of the London Brick Company, for the year ending December, 1965, the Ministry figure that was given in the letter was £17·1 million. The Library correct figure was £4·.47 million.
For British Plaster Board, for the year ending March, 1965, the Ministry figure was £27·8 million and the Library, correct figure was £6·77 million. The Ministry figure for Crittall Manufacturing Co. Ltd. for the year ending December, 1965, was £11 million, and the


Library figure was £1·15 million. That was the 1964 figure, but the 1965 would presumably not be very much different.
The Ministry figure for the Austin Hall Group for the year ending March, 1965, was £3·8 million and the Library, correct figure was £567,000. For Hoveringham Gravels Limited, for the year ending December, 1965, the Ministry figure was £13·4 million and the Library correct figure was £2·265 million, which was the provisional figure of the trading surplus.
It was not my original intention to attack the Ministry for the supply of such shockingly inaccurate information. Nor is it now my intention to do so, but it make it clear that the Moodies index the Department and I hope that the Minister will discover who supplied those statistics to him and that he will take appropriate action.
I want now to take a closer look at those profits and dividends. I asked the Library for figures of the dividends which were distributed, and I should make it clear that the Moodies index cards, the only basis on which the Library can go, do not make clear whether the figures which I am now quoting are gross or net.
The dividends paid out on preference and ordinary shares by London Brick have increased from £716,000 in 1961 to £1,224,000 in 1965—an increase of 70 per cent. in five years and an average of 14 per cent. per year. The equivalent figures for British Plaster Board are 68 per cent. up in five years, an average annual increase of 14 per cent. Associated Portland Cement showed an increase of 45 per cent. in distributed dividends in five years—an average annual increase of 9 per cent., and the Austin Hall Group increase was 50 per cent. in five years, or 10 per cent. per year.
Of the price increases quoted by Fife County Council, electrical wiring cables are easily the most flagrant example. The council buys most of these from what was Callender Cables, which is now British Insulated Callender's Cables Ltd. The amount paid out in dividends by that company has increased by 130 per cent. in five years, which is a 26 per cent. annual increase over the past five years.
The Government have been seeking for some while to secure a prices and incomes

policy. They also have ambitious targets for the building industry in regard to building houses, schools, hospitals, roads, and so on. Because of that, there is a very great need to increase, improve and encourage the efficiency of the building industry. Therefore, I should be the last person in the world to say that profits are any other than a necessary incentive to that end. Clearly, a vastly expanded demand for building and building materials can and does increase chances of profiteering. If that is allowed to go unchecked and unchallenged, it may jeopardise both the prices and incomes policy and the building targets.
I ask my hon. Friend to do two things. I ask him, first, to examine carefully the facts as I have given them. I ask him, secondly, to investigate the profit margins and dividend distributions, if he thinks any of them may be worth referring to the National Board for Prices and Incomes.
The Fife County Council has expressed a wish to see the Minister to discuss the problem with him. I hope that this request will receive favourable consideration. I hope that if the Minister does see the Council he will ensure that representatives of the Scottish Office are present, because the Scottish Office is obviously vitally concerned in a matter which is troubling more authorities than Fife County Council. If the Minister will do that, this debate will have been worth while

1.27 a.m.

The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. James Boyden): My hon. Friend the Member for Fife, West (Mr. William Hamilton) is a great zealot for public economy. Tonight he has carried his zeal for economy much further and looked at the private sector as well. The Ministry of Public Building and Works is a great buyer of these commodities. Therefore, my hon. Friend does a service to the House by drawing attention to difficulties which are arising.
We share my hon. Friend's concern about price rises. We naturally wish to have prices as stable as they can be and, indeed, wish them to fall a little. My hon. Friend may be surprised to know that this has actually happened in the case of some building materials. This


makes cases where prices have shot up all the worse. The average rise in building material prices over the whole field has not been unreasonable. However, we are not complacent about this and I give my hon. Friend an undertaking to look into and check the facts he has mentioned.
I cannot off-the-cuff explain the discrepancy between the figures I gave my hon. Friend in a letter and the figures lie obtained from the Library. There is obviously some different definition of "profits". I will certainly clear this matter up and will write to him. I am certain that both sets of figures are accurate. It is just a matter of interpretation.
The best way to satisfy the Fife County Council is perhaps if representatives of the council meet the Under-Secretary of the Ministry of Public Building and Works in Edinburgh to discuss he problem. This would save everybody a certain amount of trouble. If the matter is then still unresolved perhaps they could come to London, or I could go to Edinburgh to meet the county council; but I suggest that this is the best preliminary.
A constant watch is kept on prices as part of the Government's prices and incomes policy. We have made representations about some prices. Before I come o the details of that, perhaps I could give some general indication of movement of building material prices as a whole over the last few years. Building material costs are a very important factor in construction. They represent about 55 per cent. of the cost of house construction and a rather lower percentage of other types of construction.
They therefore play a very important part in the Government's policy of trying to enable as many people as possible to buy their own houses, and if building material costs do get out of hand it could frustrate the whole of the Government's policy in relation to house buying as well as council house building.

Mr. Reginald Eyre: Is it not extraordinary that some of the steepest increases in prices quoted by the hon. Member for Fife, West (Mr. William Hamilton) took place against a background of falling house production in Scotland?

Mr. Boyden: I was coming to this. The biggest rises in prices are among non-ferrous metals, which are quite outside the control of the Government, copper particularly so. This enters into cables and things of that sort. The hon. Gentleman was good enough to give me copies of his correspondence and I have the figures. I will certainly look into copper, wiring and cable figures, but I would be surprised if there were profiteering in this. There could be. I have a strong suspicion that it is partly due to shortages.
I take up at once the point that has been raised about substitutes. We would be very happy to see substitutes for copper, and I would strongly recommend local authorities, and anyone else concerned, to visit exhibitions such as plumbing exhibitions to see what there is there. There is a great extension these days in the case of plastic pipes. In the Ministry we have encouraged the use of thin-wall non-bendable copper tube, and we had a British Standard, 3931, accepted last year which economises in the amount of copper used.
We are still experimenting and pressing forward with still more economical uses of copper, but sometimes water authorities and local authorities are very "sticky" about using substitute materials. In the same way they are sometimes difficult about using thinner copper materials. They are often not progressive in the use of substitutes. We would be very glad indeed if the maximum use were made of these.
I was trying to explain that the general position about building materials has not been out of step with ordinary price rises and that one should not stigmatise the whole of the building material industry for excessive price increases. Some of the materials in the column of statistics sent to me by the hon. Gentleman show that there has been practically no price movement at all since January, 1965. Asphalt had risen by a point since then. My figures refer to April, 1966, and that is the position comparing 1st January, 1965, with the end of April, 1966. I will give some further examples.
Asphalt had risen by only a point; cast-iron stoves and grates, etc., were stable; cast stone and concrete products by only two points; clay partition blocks


by the same; fencing by two points, fire-clay sanitary ware by three points, but it went up in two months at the beginning of 1965 and has not gone up at all since; imported hardwood, imported softwood and imported plywood, have if anything gone down; lime hydrate is stable; lime lump has gone up two points; paint by a point; plaster a point; plastic furnishing hardware has gone down four points; conduits are stable, polythene tubing has gone down six points; wallpaper has been stable. A good many of the materials right across the board, have been pretty stable.
The general rise tends to be in the price of goods over which the Government have not very much control, for example copper and non-ferrous metals. The general picture since 1954 has been of a rise in house building materials averaging about 2·7 per cent. per annum. Prices tended not to move up in the "stop" part of the "stop-go" between 1957 and 1959 and between 1961 and 1963.
My hon. Friend asked about the reference of prices, for example that of cement, to the Prices and Incomes Board. The price of cement has risen 6½ per cent. since 1962. The increase took place in two stages, one of about 4 per cent. in 1963–64 and the other of 2½ per cent. in 1964–65. The latter price was discussed with the Government, and, in fact, originally it was higher than the 2½ per cent. since it included the element caused by the need to import higher priced foreign cement at a loss to meet a shortage in the United Kingdom. My hon. Friend knows about all this. We have often had discussions about it. When the imports of foreign cement ceased, the price was reduced.
The cement makers have large capital commitments ahead of them. They have been investing large sums, and they are making considerable progress in overcoming the shortages. There is no general shortage at the moment, except where it is brought about by causes which are rather outside our control, and it looks as though that situation will continue.
The price of bricks has risen 11 per cent. since 1962, but there has been very little movement in price since June, 1965.
The interesting thing about the London Brick Company, to which my hon. Friend specifically referred, is that its bricks have been fairly stable in price. A number of local companies have gone bankrupt charging higher prices than the London Brick Company has been charging. The tendency in times of surplus, of course, is for the London Brick Company to extend itself further and undercut the local people, because of its great efficiency. The price of its Fletton bricks is currently £6 14s. per 1,000, and the last time the price was lower than this was in 1963 when it was £6 10s. per 1,000. It is fair to say that the London Brick Company is highly efficient and highly competitive, and it cannot be charged with excessive prices and holding the country to ransom in that way.
There are other problems. In the Ministry we have considerable sympathy with the brick producers at the moment. My right hon. Friend and I have seen them on several occasions, and we are trying to do what we can to assist.
Glass was another subject which came under the early warning system. There were five building commodities which came under this non-statutory system. Sand and gravel is under discussion. Glass has been referred to the Monopolies Commission. Bricks, cement and plasterboard, have come into it. Plasterboard has met somewhat similar production difficulties as with cement—shortages through under-investment in the past. This is rapidly being taken up now, but the profits of the industry, therefore, need to go very considerably into new investment.
I can summarise the position by saying that we shall certainly collaborate with the Board of Trade and the D.E.A. in any steps to draw their attention to what seem to be excessive prices. We are very much concerned to have adequate productive capacity in the building materials industry, and, therefore, where profits are largely used for increased investment and increasing capacity we are very pleased. For example, the investment required in cement manufacturing is very great, and this is going on steadily all the time.
A word now about the way in which
the index of these prices is made up. The Board of Trade publishes data on


the movement of prices of 52 materials associated with construction. There are two sets of figures, one for the price movement of all construction materials and one for the price movement of house building materials. It is upon these that the data I have given the House are based. They give the general impression that, on the whole, building materials have not jumped excessively, except in cases where there are world shortages for political reasons.
I give my hon. Friend the pledges he asks for. We shall examine the facts. We shall draw the attention of the Prices and Incomes Board, through the D.E.A., to the matters it should have before it, and we shall gladly arrange a meeting between the Fife County Council and our Under-Secretary in Scotland.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Two o'clock.